We’ve been hearing how great automated Forex Trading system is. There are numerous benefits using it. But is it all about the good things? There are two sides in a coin, so what is the other side of an automated Forex trading system?
Some traders and investors would say that intuition means a lot when trading. Some would say that it played a major role when they are clinching a deal or when winning in a trade. But some traders would say that intuition does not play a role. Some would say that it works for them, while others would contest that. But given the fact that some people rely on intuition to get good trades, an automated system would not be able to help them. Since programs and computers do not rely on intuition at all.
Another common thing that traders who use an automated Forex trading system is make their computers and programs take their place in trading. Actually, this is a great idea. Having a machine to do your trade for you making you deal with other matters. But this turns into a disadvantage especially when you let the program and computer do ALL the work.
It is very easy to be comfortable with this setup, relying with your software too much. Actually, systems could make mistakes too. You would also need to recognize opportunities and at the same time do on-hand trading.
Another downside of an automated Forex trading system is making sure that your computer is running all the time and you have a dedicated server to run your automated trading. This is to make sure that your expert advisors or EA would work with your home and work computer.
There would be times when you would encounter a chart pattern or wave analysis which is very hard to accomplish. So you would have to get some professional people to interpret your charts for you and decode some extremely hard patterns.
Another truth that you would have to face is that not all expert advisors handle errors and other unexpected things easily. So you would need to brace yourself against anything that could disappoint you. Not everything is perfect. So, you would to be prepared to face disappointments and handle them. This is why you would still need knowledge in manual Forex trading.
Nothing is perfect, even computers and programs still make mistakes and can find it difficult to deal with unexpected and crucial points in trading. Traders and investors prefer to use both automated and manual trading. They would use automated trading system if they find manual trading difficult. While, simple systems like simple chart patterns are left to be done manually.
Aside from all of these, another downside is that automated Forex trading is too popular over the internet. This can either be good or bad. The good thing is that getting an automated system is easy and at the tips of your fingers. While the bad thing is that too much popularity can cause numerous websites to come up with scams and cheating over the internee.
There are a lot of automated Forex trading systems for sale in the internet. They claim that their products are the best among the systems, but they fail to meet the standards. That it why, people are advised to check on the comments of customers and have a money-back guarantee for the purchase.
Showing posts with label Risks. Show all posts
Showing posts with label Risks. Show all posts
Wednesday, October 19, 2011
Thursday, October 13, 2011
The Risks Of A Forex Robot
Who does not want to have some share with the $3 trillion market turnover that the Forex market gets everyday? If you are one of those newcomers who are learning how to be a part of the Forex trading market and having difficulty to cope with it, you would also receive a lot of talk about getting a Forex trading robot to help you with your trade.
We have hear how good this system is and how a lot of people have gained a lot from using it. But how good is it, really? Could it just be too perfect that we do not want to worry about anything. Contradictory to what most people think, Forex robots would also have downsides.
What are these negative effects?
• Heavy reliance on your equipment
A Forex robot is there to help you not to completely take over for you. A common mistake made by traders is let automated trading programs do the work for them and never ever put even small manual trading. This can turn into a trading disaster in the long run.
If you rely too much on your equipment, what would you do if your computer crashes or you robot encountered problems? Would this be the end for your trading career? Having sufficient knowledge in doing trade manually could save it, making it really essential if you wanted to succeed in Forex trade.
Another thing is that most traders that use automated trading system would just leave their equipment alone. Automated trading system, specifically, Forex robots have the feature called optimization. This would allow traders to check on previous trades and determine how trades have been won in the past. This would allow your system to improve its program. But, there would be times when the optimization process would be too much. It could keep improving its system until it sees that there are no losses on the data. But this could buy time and can even lose transactions in the end.
• Believing its magic
There is no such thing as a perfect system. There are some Forex robot systems that say that they have zero losses under their belt. Systems that claim this could happen aer actually losing their account. There are experts who say that system like this could actually earn a break-even after 20 years!
So, just the same with the first point, even if there are Forex robots that claim to have as much as 95 to 100 percent gain, relying on them too much and letting them do the trading without the trader getting involved could lead to disaster. But traders would have to dig deeper to understand that, actually, their account could end up dipping as much as 75 to 80 percent. Eventually, this could entirely deplete their account.
• Alert signs
Some Forex robots would use bad money management strategies, like stop loss could be larger that the target. Others would not have any trading strategy at all! Some would not allow backtest, which is something that traders should be conscious about.
Bottom line is that no automated trading system could make you rich by millions overnight or in weeks. The Forex market is unpredictable and could be exciting. But to succeed in this field, miracle-workers like automated trading system is not the answer. Of course, it could help or provide the necessary support in Forex trading. But still, a good trading mindset and skill could take you to a long way.
We have hear how good this system is and how a lot of people have gained a lot from using it. But how good is it, really? Could it just be too perfect that we do not want to worry about anything. Contradictory to what most people think, Forex robots would also have downsides.
What are these negative effects?
• Heavy reliance on your equipment
A Forex robot is there to help you not to completely take over for you. A common mistake made by traders is let automated trading programs do the work for them and never ever put even small manual trading. This can turn into a trading disaster in the long run.
If you rely too much on your equipment, what would you do if your computer crashes or you robot encountered problems? Would this be the end for your trading career? Having sufficient knowledge in doing trade manually could save it, making it really essential if you wanted to succeed in Forex trade.
Another thing is that most traders that use automated trading system would just leave their equipment alone. Automated trading system, specifically, Forex robots have the feature called optimization. This would allow traders to check on previous trades and determine how trades have been won in the past. This would allow your system to improve its program. But, there would be times when the optimization process would be too much. It could keep improving its system until it sees that there are no losses on the data. But this could buy time and can even lose transactions in the end.
• Believing its magic
There is no such thing as a perfect system. There are some Forex robot systems that say that they have zero losses under their belt. Systems that claim this could happen aer actually losing their account. There are experts who say that system like this could actually earn a break-even after 20 years!
So, just the same with the first point, even if there are Forex robots that claim to have as much as 95 to 100 percent gain, relying on them too much and letting them do the trading without the trader getting involved could lead to disaster. But traders would have to dig deeper to understand that, actually, their account could end up dipping as much as 75 to 80 percent. Eventually, this could entirely deplete their account.
• Alert signs
Some Forex robots would use bad money management strategies, like stop loss could be larger that the target. Others would not have any trading strategy at all! Some would not allow backtest, which is something that traders should be conscious about.
Bottom line is that no automated trading system could make you rich by millions overnight or in weeks. The Forex market is unpredictable and could be exciting. But to succeed in this field, miracle-workers like automated trading system is not the answer. Of course, it could help or provide the necessary support in Forex trading. But still, a good trading mindset and skill could take you to a long way.
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