Forex Fifo Rule
How to choose the best Forex Robot
When I look around the forums of different currencies, almost always invariably see a post from a newbie asking "What is the best of EA? Or" What is the most profitable forex robot? ", In the vain hope that a trial trust total strangers will save months of trial and error and reward with instant riches. If only it were that easy, everyone would be millionaires without having to raise just a finger. Since we are firmly rooted in reality we know that does not happen that way unless you win the lottery.
So, what to look for in Forex Robot?
Here are some features to look for or avoid when you are looking to reduce the short list to buy Forex Robots. This is based on my own experience of testing and development of MetaTrader EA in the past five years.
1) Avoid eas Forex Market that only provide new verification testing of its profitability. Back tests are simulations only against the tick of data (price of a broker or a third source), so are not true or accurate reflection of the actual negotiation of market conditions. The delays in execution and slippage can severely impact profitability the robot. Another great danger of back testing is that it is easy adjustment of the curve "or more to optimize the settings on the robot to adapt to the available data. So what we have is a robot that has been optimized to fit historical data, rather than one that is sufficiently flexible to adapt to current market conditions. The foreign exchange market, like all exchange markets "personality" over time and therefore historical data is now the way a clear indication of what will transpire in the future.
To summarize the argument test again, with the benefit of hindsight is very easy to optimize an EA to produce a benefit, unfortunately we live in trade can not benefit from this luxury. So back testing is not a good indicator of future profitability of a robot currency.
2) Find the actual statements of direct trade real money accounts. ie. No demo accounts. demo account not only supply data sometimes vary price and speed at which also does not give an accurate representation of the speed and accuracy of trade execution, no matter what your agent tells you, even if the price of data is the same, the execution of operations can vary widely enough to impact their profitability. The longer the period of actual states operating in the best, but be aware of gaps in the statements could indicate "cherry picking" or the selective use of trading statements a week or a month or even particularly successful three months.
2) Know the trading conditions of their broker chosen, ie, be aware of any restrictions about the benefits and have at least Stoploss and spreads and leverage that can affect the performance of your EA. Also recent NFA rules on coverage and FIFO can also affect the operation of your robot, so be aware of this if you are using an NFA registered broker.
3) Avoid or robots forex eas are based on profit-taking is too small or medium of victory is too small. ie. the difference in victory and loss by half. If the difference between a win or a loss is too small, relatively small changes in slip and execution of operations can cause serious effects profitablity.
4) Consider the type of management of money (if any) is used in the foreign exchange robot. Many robots use some form of theory of Martingale, which in fact many batteries or double batch size when a loss of trade. If the robot uses this form of money management is a very real possibility of leverage over in the case of prolonged periods of withdrawal.
5) Avoid Forex Robots have a victory to ration the loss of more than 80%, some might suggest a 70% but the debate that could ad nauseam. The fact is that to achieve these very high accident rates should also lead to win floating loss or losing trades for long periods before they may or may not make a profit. Usually indicates that the trades or not a stop-loss is present or lead to a stop loss very wide, either which is potentially dangerous to the operating account. Again and again I have seen these types of trading systems come off after the worst happens.
Looking at these five rules you will be able to better identify foreign exchange robots are more likely to produce a profit over a period of time long, but like everything in life there are no guarantees. As mentioned earlier the foreign exchange market has changes in personality and just because a robot has worked well for 2 years does not mean it will continue to pursue.
About the Author
Brendan Wilson is an professional Forex trader with 5 years experience. Visit his website for more Forex Information, broker and ea reviews.