The Bad News About Forex Automated Trading

I’ve read a lot about how automated forex trading systems just don’t work in the long run but I can’t conclude this from personal experience. I’ve never seriously traded forex using automation. The following is an email from a trader who can conclude this from his experience. I found it totally worth sharing.

I came across your blog this afternoon whilst casually surfing the various forums in lieu of watching rubbish on TV.

I find your search for trading success an interesting one as in many respects it mirrors my own experience in many ways.

I spent well over two years, pretty much full time, searching for automated solutions to trading, having been in the process automation business for 25 years. To summarise, I have concluded it is a futile exercise with the technologies currently open to the average retail trader. I have yet to find any expert that is reliable enough to be left trading on its own and have pretty much concluded that most are really curve fitting solutions. I have seen no strategies posted anywhere that are consistent or reliable and capable of being automated without significant risk. I see some that pertain to be profitable (Artemis would be an example) but it needs constant adjustment and tuning which makes it akin to semi automation, not full automation.

However, there are manual strategies that are available that are profitable; they just do not lend themselves to automation due to the ability of the human braoin to make decisons based on proce movement that are pretty much impossible for any expert to make. So I abandoned my search for full automation solutions a year ago and concluded semi – automation was probably the right route. I trade manually today, with a few automated aids.

Linked with that, money management and certainly trading psychology are massive keys to success, the first to ensure you are alive to trade tomorrow and the latter because it takes time to get your mental state right to be able to trade at all, and that is what takes the time Rich. Sure, you need to understand the basics of trading, but without the right mental state, you’ll never be consistently profitable.

Your target of 50% per annum is achievable so keep up your search.

Comments

22 Responses to “The Bad News About Forex Automated Trading”

  1. Ray The Money Man on September 4th, 2008 12:24 am

    Great Post! I am just barely getting started with the Forex Trading and it was a huge help!

    http://www.ino.com/info/107/CD3116/&dp=0&l=0&campaignid=3

  2. Warren on September 4th, 2008 6:56 pm

    What is this Artemis thing? I haven’t seen it and I’m searching for much the same thing- a Semi Automated system.

  3. Kevin on September 6th, 2008 3:58 am

    I’ve just started to study forex trading as it started to gain popularity in my country and many young traders are able to retire early by just trading. Mostly are done without robot.

    thanks for the sharing.

  4. Andrew on September 6th, 2008 11:06 am

    I like the idea of automated trading systems, especially ones based around the Metatrader (MT4) trading platform. There are some pretty good ones out there and I reviewed a few I have on my http://www.forexboost.com site. The problem with these programs however it that they can be undependable. You really need to watch them to make sure you agree with the trades they execute. For example if price appears to be peaking out and your automated robot executes a buy trade, sometimes it’s best to close it. The best way trade, in my opinion, is to find yourself a nice forex trading strategy and make trades yourself. That was, you’re in full control and you don’t need to worry about what some program is doing on your behalf. Also, in the longer term, I do agree that these automated trading systems are pretty much break even if you’re lucky.

  5. rukin on September 6th, 2008 9:50 pm

    Thanks for confirming my thoughts all this while about robots.
    Human brains, and human minds, are the best tools for fx!

  6. Logan on September 15th, 2008 3:22 pm

    I have had up and down success with automated forex software. I find if I can pick the right times to run them, I can stay in profit. But you really need to run them on a demo account first and monitor when its successful and when its not, and translate that data to a live account…

    I hope this isn’t considered spam, but here is a great review of one that is giving me the most consistent success right now called forex funnel.

    http://www.forexfunnelreviews.com

  7. Lane B on September 22nd, 2008 12:01 pm

    Forex Funnel is a scam !

    they also made forex killer ! and forex razor and a few other B.S Trading system we ALL do not work, your just another click bank system product pedal ! go away ! there are a lot of reviews “MOST ARE Negative about that stuff http://www.forexscamcheck.com [b]Forex Scam Check[/b] has been around going on 2 years now

  8. Martin Lee on September 23rd, 2008 12:25 am

    Hi there,

    I’m a newbie to Forex Trading & friends told me auto-trading don’t work.

    He got to review the following Software that looks at Forex Trading on a Mathematical perspective.

    And they’ve shown that the program works and earn your profit every trading days.

    Don’t take my word for it. Do check it out and let others know if it works or not.

    http://mlnetbiz.com/hedgecow

    Martin Lee

  9. Chinedu on November 2nd, 2008 5:25 am

    I think semi automation wil work best.

  10. Anaru on November 8th, 2008 7:52 am

    Hi guys,

    I’m hoping someone can help me out here. I’m pretty new to trading. I’m looking for a semi automated forex software program that will make calculations to my inputed formula and make them pending orders one at a time and will also delate pending orders when certain stop losses or take profits are reached.

    Any help would be much appreciated

    Cheers

    Anaru

  11. Alex on November 8th, 2008 3:45 pm

    I for one know a hedge fund that has been making 30% p.a. for five or six years using an automated forex system. I would not discard automated trading just because junk expert advisors donwloadable for free from random online fora do not bring (surprisingly!) any long-term profit. I think it is a question of sophistication. As to the manual trading, if you can say precisely why you did or did not eneter a particular trade, your system can be translated into an algorithm. Only the number of rules may be higher in this case than in most automated systems.

  12. forextradingfan on November 12th, 2008 1:16 am

    I have also not too good experience with Automated forex trade. I agree with the reply that you have received. ti is better to plan out strategies before you actually start forex trading, because it not just save you but it also lets you to make forex earn for you.

  13. sully on November 22nd, 2008 8:58 am

    Good info, automated trading is not the way to go with forex.

  14. Forex Trading Power on November 24th, 2008 3:36 am

    Soem of my friends feedback to me that a lot of automated systems they bought did not earn consistent profits for them. They still prefer to trade the manual way.

  15. Forex Detector on November 24th, 2008 8:54 pm

    Automated Trading Systems have come a long way since Global Alpha and the Nova Fund. From just doing simple Moving Average Crosses, to now the more complex Neural Networks that are taking the shape of the MQL championships.

    We will eventually see a top trading system shortly.

    Tom

  16. Forex Sanity on December 22nd, 2008 5:27 pm

    Aren’t these automated systems doomed by definition.?

    Think of a tournament of computers playing chess, only the one programed the best will win. The same goes for Forex robots, without the human element, then only the most advanced will win, therefore you must constantly be advancing your robot or a better one will come along and beat you, which pretty much means it is back to the human element being involved in trading, only at the algorithm design level not the trade level.

    After you’ve gone through all that to get an edge on your competition, would you really sell the system (and eliminate your edge by giving it to your competition) by selling it for $77 dollars?

    Forex Sanity

  17. Christian on December 27th, 2008 12:53 pm

    Automated systems are only as good as the one who supervises them. So yes, I am a user of the so called forex funnel and I tried also some other bots. Left alone I dont know if they could earn anyone a profit as it is to easy to fool this bots.

    So I am lazy and use this bots to back up red pips, enter an automatic s-l/t-p and open a good looking position i might had not seen. Since I use a mix of automation and hand trading my ROI got skyrocket

    But I would never ever let theme run on Autopilot and go out for dinner or take a nap 🙂 Oh and No, no, no this robots arent “know nothing about forex and earn a fortune” things…. Its a mix of automation and know how that makes the profit.

  18. Xenon on February 15th, 2009 2:28 am

    Meet – Forex Killer Automater!

    With this nice piece of software called AutoFxK developed by A. Alexander John you can now automate your Forex Killer trading in Metatrader4 platform!

    100% autopilot approach! No more boring manual price data loading!

  19. ahmad kamal on February 15th, 2009 7:47 am

    I think to do forex trading,you still need a Automated forex system to help you in the trading but dont trust it 100%.

  20. forexbrokers on October 24th, 2010 11:15 am

    Robots are a lie. They tick for a while and then die out. You have to learn to trade yourself, otherwise your trading career is doomed 🙂

  21. Manoj Kumar on November 11th, 2010 7:23 pm

    I would agree with you about expert advisors. I am a MT4 developer as well and it is HIGHLY difficult (if not impossible) to program something considering ALL possible combinations in the market. A good solution is “trade copier”. I had exactly built one and collaborated with professional traders (all with over 6+ years experience). We let them trade and simply replicate trades for customers. It serves the best of both worlds – human intelligence and software automation. My website is http://www.forexsignalsafe.com and it is getting a good traction recently

  22. Alex on December 9th, 2010 6:49 pm

    I always trade with robots, but u right, they don’t work in the long run. It is very hard to make a set of robots for profitable trading.

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