Forex robots are one of the main types of automated forex software available. A forex robot uses a predefined set of rules to automatically trigger the placement of a trade via your trading platform.
Using a forex robot can offer a trader the following advantages: It takes the emotion out of trading and frees you up from having to sit at your computer for hours on end waiting for the next trade setup.
But using a forex robot is not without its risks. There are some inherent problems with most forex robots that make it very difficult to tell how good a forex robot really is and whether or not it’s worth purchasing:
Problem #1 – Forex robots typically only work best in the market conditions they were designed for.
Problem #2 – There is no way to tell what criteria the robot is using to base its trades on.
Problem #3 – Profitability numbers are often based on back tested results over periods for which the robots are optimized to perform well.
Problem #4 – Because of #3 above, previous results are not necessarily indicative of future results, and can in fact differ substantially.
Problem #5 – Many robots have a lot of settings, first of all making it very difficult for a beginning trader to set up, and secondly making it impossible to choose the best settings without over optimizing.
So which ones actually work, and which ones are guaranteed to drain your trading account?
This is an ongoing debate and like anything else, there will always be traders arguing for either side; those who have made money with them and those who have lost money. There are however, a few forex robots out there that can be profitable if you know what to look for.
First, look for live trading proof. Many developers tend to be lazy about providing proof (often because there’s nothing good to show in the first place). If there’s no proof provided (i.e. live trading statements, etc.) do not buy it. And even when it’s provided, it doesn’t always mean it’s authentic.
Has the company/robot been around for awhile? It’s a good idea to select a robot that has been around for awhile with a proven history of profitability. This also makes it possible to read reviews from customers who have been using it for more than a few months, under different market conditions, and who have really had a chance to test its performance.
Does the robot come with good support material? Forex robots can be difficult to set up, especially for a beginner. Make sure the robot you buy, comes with good tutorials on how to get started and how to get it set up properly, and a way to contact the company if you have problems.
Do they offer a refund or a money back guarantee? Most robots offer a 30-60 day money back guarantee, which gives you time to test the product on a demo account to verify any performance claims, without risking any real money.
Is the robot you are going to buy, compatible with your forex broker? There are forex brokers out there that frown on traders using robots with their trading platforms, especially profitable forex robots, and they try to stop traders from using them. Make sure any software that you purchase is compatible with your forex broker. We have reviewed many of the most popular forex robots out there to assist you in your purchasing decision, and all but a few turned out to be a complete waste of time and money.