Download - Does Automated Forex Trading Really Work?
Does Automated Trading in Forex Really Work?
Provided by WorldWideMarkets www.worldwidemarkets.com
Questions please contact: [email protected]
2 |
WorldWideMarkets www.worldwidemarkets.com
Does Automated Trading in the Forex Market Really Work?
Pleasedon’tletthetitlemisleadyou;Iwillnotbespendingthenext2pagesbashingautomatedtrading.IdofeelitservesanimportantfunctionintheForextradingindustry,especiallyfornewtradersorthosethataretryingtodiversifytheirportfoliowithForexbutdonothavethetimetodedicatetobecomeadaytrader.However,justliketryingtotradeForexonyourown,it’snotjustpressingabutton,andsettingandforgetting.Findingautomatedsystemsorsignalprovidershasjustasmanypitfallsasself‐directedtrading.Thecommonmistakescomeindifferentshapesandsizesandarisemoreoftenfromdelusionsofgrandeurratherthanalackofskillsorintelligence.Soaskingthequestiondoesautomatedtradingreallywork?Yesbuttherearecertaininsightsyouneedtobeawareofbeforeselectinganautomatedtradingsystem,website,orexpertadvisor.Insight#1:PastresultsDONOTguaranteefuturesuccess.Thelogicis:theyhavebeensuccessfuloverthecourseofthelastnumberofmonthsoryears,whywoulditchangenow?ThisisBYFARthenumberonemistakemadewhenchoosingasignalprovider!Peopleseethesepastresults,lookthemoverquickly,asknoquestionsofthesignalproviderorEAcreatorandjusthandovertheirmoneytoopenanaccountassumingtheywillprofit.Bottomline:Previousresultsdon’tmeaneverything.Previousresultsshouldbeoneofseveralfactorsusedwhenevaluatingatradingsystem.Insight#2:PercentageofwinningtradesisNOTthemostimportantstat.Alotofonlinetradingandautomatedsystemsshowthesefantasticresultswheretheywin30‐40tradesinarowandpeopleassumethatthisequalshugeprofits.Onthesurfaceitisagoodthing,butyouneedtodigdeeperandfindoutwhathasgoneintothesetradestomakethemsuccessful.Theprimarythingyouarelookingforisdrawdown.Drawdownishowmuchriskthetradingsystemiswillingtotakewhilewaitingforthemarkettoswinginthedirectionofthetrade.Thereasonthisisimportantisthatatradercouldmake30successfultradesinarowmaking10pipsoneachtrade.Hethenmaytake2tradesforlossesof22pipseachandwindupwithasuccessrecordofover95%butstillhavelossesinhisaccount.Bottomline:Forgetaboutconsecutivewinningtradesorpercentageofwinningtrades.Focusonthetradingsystem’sdrawdown.Thetypicaldrawdownyouwanttolookforislessthan10%inanidealworldbutyoushouldbelookingatanythingwithmorethan20%asanabsoluteMAXIMUM.Iftheriskmanagementisupsidedown,thatisastrongindicationofasystemwilleventuallyfailandleadtoheavylosses.Insight#3:Ifyoudon’tgettotestthesystembeforeyoubuyit,it’sNOTok.Incertaincaseswithtradingsignalsorautomatedtradingsystems,thepricetagcanbequiteexpensive.Ifthesellerdoesnotgiveyoua15‐30daytrialperiodorsomekindofmoneybackguaranteethatisaMAJORredflag.Thiscancauseyoutobeadouble‐loser:shellingoutbigdollarsforanunsuccessfultradingsystemandlossesinyourtradingaccount.Bottomline:Mostlegitimatecompanieswhoaresellingsignalsorsystemswillgiveyouatleasta2‐weekdemooramoneybackguarantee.Beverywaryofthecompanieswhodonotoffertrialperiodsormoneybackguarantees.
3 |
WorldWideMarkets www.worldwidemarkets.com
Insight#4:Automatedtradingorsignalsystemsarenotjustsetitandforgetit.Whenatraderbuysasystemtheyfigurealltheyneedtodoissetitupandwalkaway.Whilethistechnicallycanbedone,leavinganautomatedtradingsystemunattendedtoletitrunonitsownisoneoftheworstthingsyoucando.Thesystemcouldblowoutyouraccountinadayoraweek.Inaddition,asystemcanmalfunctionifitisnotsetupwiththerightparametersorifthebrokercan’tsupportitverywell.Ihaveseensystemsthatwereup20%inamonthandthendown40%aweekafterthat.Bottomline:Spend5minuteseverytradingdaymakingsureyourtradingsignalorEAisrunningproperly.Thisisyourhardearnedmoney!Don’tletitoutofyoursight.Insight#5:LengthoftradingrecordISimportant.Whenreviewingasystemyouwanttoseeatleastoneyearoflivetradingsoyoucanseehowitperformedindifferentmarketconditions.Somesystemsstartouttradingverywellinarangingmarketbutthenmarketconditionschangetoatrendingmarketandthesystemfallsapartandyouareleftwithanemptyaccount.YouseethisalotwithnewsystemsandEAsthatcirculateintheForexcommunity.SignalXbecomesalltheragebecausetheymade50%inamonthandeveryonerunsoutandbuysit‐andthenittanks.Youeithergetasmallgainfollowedbyahugelossoryouarelatetothepartyandyouraccountgoesstraightdownafteryoubuywhatyouthinkistheultimatesystem.Bottomline:Don’tbefooledbyhypeorsalespitches!Ifasystemissuccessful,itwillworkformorethanamonthandthecreatorwillcontinuetoupdateittoadjustformarketconditions.Ifyouseesomethingpromisingwithafewmonthstrackrecord,keepitonyourradaruntilitismoreestablished.Conclusion:Unfortunately,therearemanymorelosersandscammersouttherethanhonest,successfultradingsystemproviders‐soalwayserronthesideofcaution.DoyourresearchandavoidthecommonmistakesoutlinedabovethatmanypeoplemakewhenchoosingaForextradingsystem.Youwanttoinvestinsystemsthatyoufeelconfidentinandnotworrythatatanygivenmomentthebottomcandropout.It’syourmoney!
