If you are not familiar with forex robots then do a quick search for "forex robots" now and you will see of 79 million search results feeding you hundreds of thousands of trading systems that claim to make a massive return on your investment. You will be baffled with amazing back test results from previous data that show great profits.
Let us first look at the truth about back testing. Back testing is a great way to find out if your system has any chance of survival but one of the biggest flaws and the most deceptive thing about it is the ability to change the settings to suite the data that you are testing on. For example, if you run a back test with a visual chart and you see that the robot is stopping the trade out two early on several occasions causing profit to be limited, the tester can simply extend the stop loss for that period giving higher profit. There is however, nothing to say that over the next period moving that stop loss will give the same favourable results. Overall tweeking the settings to give optimal results for a certain period in time is great but you cannot expect the market to move the same way in the future.
One thing you must always bear in mind when thinking about purchasing a forex EA or robot is the fact that the back testing results are published with this tweeking done over and over again until the best results are visible. As a forex trader you will be aware that the decisions you made last week that bought you profit will not necessarily repeat themselves the following week.
So are all forex robots a waste of time?
Not at all, the best traders in the world use automated systems to set there trades and pick entry and exit positions but they will also interfere with those trading systems many times to ensure it is compatible with the current market conditions. What you have to ask yourself is do you have the ability and the time to do the interfering. One of the biggest reasons for people using automated forex systems is because they don't posses these things, hence they are doomed to fail.
What's the answer?
Forex signals are a great way to take advantage of a professional traders experience and their ability to be able to tweek these systems correctly. Forex signals come in many forms from email alerts, SMS and published predictions. But the best automated forex system is a signal provider copying trades straight into your Metatrader 4 broker account. You still keep control of your account and have the ability to interfere in trades if you so wish but if just left to the devices of the signal provider and their track record is good you should see the same results.
Adam has been trading forex for 7 years and has written extensively on the development of trading systems. As a forex signal provider Adam has developed a signal service to suit all levels of forex trading from completely automated forex strategies to basic set and leave trading signals.
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