How to become a successful trader
Forex trading Robots will always fail !!
Anyone should be able to load up some trading software, connect it to their trading account and just start watching the dollars add up, right? Well, to date, all this is another false narrative, just a myth!
Nowadays Robots are available for less than 100 USD and forex brokers will give you an automated trading system for free. Why are brokers offering these products for free? The answer is hidden for the Retail Trader but one of the reasons is simple: these products generate a lot of trades which equal commissions in the broker’s pocket. In fact, it is a perpetual commission machine for the broker.
FX robots are just robots. Even though they are capable of performing highly sophisticated tasks and many at once, every Forex robot is still incapable of creative thinking. They cannot imagine what may take place in the near future, as their functionality is restricted to how they were initially programmed, as well as past performance.
After trading for so many years there are only two absolute truths that I believe in. One – all trade strategies can be reduced to continuation and mean reversion. Two – HFT (=high frequency trading) aside, there is no automated trading strategy ever created that will not blow up your account in the end.
Robots are always victims of regime change and such regime changes happen all the time in the markets. They are, at most, successful for a limited period of time. As market conditions evolve, trading rules that proved valid in the past have a tendency of becoming obsolete very quickly. Just think of the ‘old days’ when long term trend trading was in vogue, followed by intra-day trading and now succeeded by HFT trading, all in addition to temporary changes in volatility, jittery trends, false information etc….
We are well aware of this transition but we keep using the same indicators and trading strategies applicable to the ‘old days’. Our trading strategies need to evolve very quickly and adapt to modern circumstances.
The majority of robots trade within a certain range. When an unanticipated and strong range breakout occurs, it wipes out the small profits that they have made. Alternatively, some robots can gain a profit in a positive trend but may lose money in a choppy FX market.
Free or low-cost automated trading products fall into the category of “In search of the Holy Grail”. No one has found it yet. Only after you have gained the necessary trading experience, using software as a filtering tool is a reasonable approach.
The concept of turning on your computer, firing up your trading robot, and then heading to the golf course while your robot is making you money defies common sense.
As someone once said: “common sense is truly uncommon”.
Rudy – Professional Forex Trading Mentor
+27 82 926 6855
Wipe out your fear, failure is not an option
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