Forex Auto Trading Systems – Investing in the Online Currency Exchange Markets

Forex Auto Trading Systems – Investing in the Online Currency Exchange Markets

is available to the public under various colourful names, such as Forex Goldmine, Forex Bulletproof, Forex Shockwave, Primeval EA, Probability EA, and the list goes on – there are literally hundreds of these programs available, and most of them run on the industry standard Metatrader MT4 trading software by Metaquotes.

While Metatrader can be used to place trades manually in the forex market through various online brokers, it also has a feature called Expert Advisors. An expert advisor is a script used by the software to place trades automatically according to signals generated by an internal algorithm or program code. This algorithm makes calculations from data it receives from the broker’s servers, primarily price information, but also bases its decisions on variables such as the time of day, historical data going back over hours, days and months. It also takes into account the size of the account, risk management factors that have been selected by the user, and money management. The quality of the programming and the trading strategy employed is what distinguishes the wide variety of forex trading expert advisors on sale, at prices ranging from $37 to hundreds of dollars.

So what is a potential buyer to make of all these programs? Do they all work as advertised, and what are the relative benefits of each type of expert advisor? The answer, unfortunately, is that many of these programs do not live up to the internet marketing hype used to sell them, and could potentially lose a lot of money for the unwitting would be forex trader. The only way for forex traders to be sure of success in their investment activities, is to dig a little deeper than the marketing spiel designed to paint these various products in the best possible light, and do some due diligence by using independent review sites who have tested these expert advisors and rated their performance for the public.

Be aware however that there are so-called review sites which will push certain EA’s as a marketing ploy, not having done any independent testing themselves, rather relying on dubious data supplied by the vendors of the software. These are usually pretty easy to spot as they are not sophisticated websites, and are literally sales pages dressed up as review sites. The most reputable genuine review site goes by the unlikely name of Forex Peace Army. There are no sales pages on the FPA site, but it contains exhaustive lists of not only automated forex trading software, but also manual trading systems, signals and indicators, forex brokers, literally any service related to online forex trading.

This author also has a review site which can be found in the resource box. I do test expert advisors myself, and yes I do link to the various sales pages used to sell expert advisors to the public, and there is a disclosure statement on my website which states that I will earn an affiliate commission should a potential investor choose to buy a Forex Auto Trading System after being referred from my website. This is simply a way of recouping the costs of time spent in what to me is an engaging hobby.

I hope that the visitors to my site appreciate that I am probably not doing myself any favours by exposing the weaknesses of various EA’s to the public as it probably turns away a lot of potential buyers, but I have a hidden agenda if you like. My theory is that if we blow away all the chaff, we get to the real thing. Forex trading isn’t a way to get rich quick, in fact I have only lost money so far in my trading activities, to be brutally honest. The thing is, that as any professional forex trader will be quick to tell you, trading futures with leverage is a dangerous game, and newbies such as myself are bound to get their fingers burnt at first. What I have learnt from my first year of trading, I have tried to summarise for the benefit of my readers on my site, which is also a blog site.

In brief, here are some key lessons I have learned in my first year of trading:
1:) Know yourself. What kind of trader are you? What do you hope to achieve in your trading activities? How much can you afford to risk, and potentially to lose? The answers to these questions will determine what kind of expert advisor you will be buying. If you have access to a relatively large pool of risk capital eg. $10,000+, and can afford to lose it, but would also like to potentially double it over a year, then you might employ a longer term strategy used by expert advisors such as Forex Goldmine, which hold trades open over a longer period in the hope that the markets will change. When I first started trading this so-called “no-loss” strategy appealed to me, and indeed to the cashed up investor, or some would say “gambler” this may be an attractive liber ltd.

However, my mistake was to be overly aggressive and optimistic in my trading strategy, and use this type of EA on a $1000 account. What I should have done is exclusively used a scalping EA such as Primeval EA on my live account. A scalping strategy EA uses stop losses to cut the EA’s losses as it goes, and if I had been prepared to accept a lower return using this type of EA I could have avoided the losses I made on Euro based trades when the market took a sudden upward turn after the European credit crisis earlier this year. A lot of currency traders including manual traders, were caught out by this move, as they expected the price of the Euro in relation to other currencies to continue to depreciate for some time, but there was a rally that caught a lot of people unawares.

2:) Know the markets. There are certain days which are not good days to trade due to economic news being released that has an impact on currency prices, and you can find out what these days are using a forex calendar. The one I use is on a website called Forex Factory. Some expert advisors are programmed not to trade on Fridays, because the market can often behave erratically as large funds sell off currency at the end of the trading week, creating an impact on prices. What I have found is that the best EA’s are programmed to trade on certain currency pairs which react in relatively predicable ways at certain times of the week, and indeed at a certain time on those days, usually on market open which corresponds to midnight Greenwich Mean Time or an hour or two after midnight depending on which trading session you are trading in eg the Asian Trading Session.

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