Over the years, Forex trading robots have flooded the market with mixed results. Of course, there are always some good ones that work, but unfortunately, most eventually fail. In this article, we will look at the potential of trading robots, also known as expert advisors, to see if it is possible to have a Forex trading system that actually works.
Opportunities and Limitations of Trading Systems
The coding of expert advisors is always improving and now there is even software that can read news alerts and apply that information to the trade. This new wave of programming is at the forefront of trading algorithm analysis; there are issues that a major trader could address, but this is a conversation for another article. The limitations of the trading system are determined by the programmer. There are hundreds of indicators in the market that indicate the markets and they will be correct for a certain percentage of the time. The problem is to make sure they have enough time to ensure overall profits at the end of the week, month, or year.
It is common for the Forex robot to work for a while, then go through bad patches that can consume all of your profits and even destroy your account. While these expert advisors are being sold on a deliberate basis, there is no way to know how to accurately predict the market, and a rule-based trading system may not follow the market next year, as it did a year ago.
A trading system that can adapt
So, the Forex trading system that really works will be one that can adapt to the trading environment at any one time using more than one set of rules. With a system that adapts multiple rules, you can adapt to multiple scenarios. For example, the Forex robot, which uses the scaling system in a trending market, may lose consistently as the market consolidates. Having a system that can detect changes in the market and move to consolidation techniques would yield exceptional results.
There are hundreds of systems on the market and the best advice we can give when buying is to look at past performance and pay close attention to payouts. The Forex trading system that really works will have at least 20% of the funds, except then there is a high risk that you will eventually destroy your account.