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Saturday, October 4, 2008

Automated Forex Robots - 2 Reasons You Are Likely to Lose Your Equity and Wipe Out Your Account

By Kelly Price

Most automated Forex robots stand no chance of going you gains but even the few that could help traders win fail to do so. If you are thinking of buying a forex robot then you should think very carefully...

Here are the two reasons that lead to equity wipe out.

1. Trusting a Back Tested Simulation to Repeat Itself

Look at any automated Forex robot sold heavily online and what do you see? - A track record that looks to good to be true and Guess what? - It is! It's not a real one, it's a simulation and you will see this written all over the track record.

This simply means the vendor has made up the track record having all the closing prices to hand and of course this is so easy a child could do it and produce huge gains. Surprise, surprise, you don't get advance warning of the price in the real world and you have to trade not knowing what happened and this is the challenge of forex trading!

Forex traders however don't stop to think that these track records are NO indication at all, of proof the system works in real time and then are surprised when their $100 robot, destroys their account and they end up with a wipe out.

Any Forex trading system which has a simulated track record should be avoided at all costs, as the odds are you will get wiped out by these so called expert Forex traders which are anything but.

2. Discipline Through Losing periods

There are a few systems around that can make great gains but traders still manage to lose with them - why?

Because they lack discipline and cannot keep executing their trading signals through periods of losses and losing is part of winning in forex trading.

Today, there is a big industry online that tells you draw down's don't occur, or can be 1 or 2 trades - but this is fantasy land not reality. Even the best trader's face weeks of losses and you will to, this doesn't mean you can't win but you MUST stay on course until you hot profits again.

To stay on course with your Forex trading system you must take the trouble to learn how and why it works, so you have confidence in it, to follow it with discipline.

If you can't follow a system with discipline - you don't have one, it's as simple as that.

Making Big Gains

Most automated Forex robots will wipe out your equity - but if you find an good one, it can lead you to triple digit long term gains but you have to learn to lose to win - do that and you can enjoy currency trading success.


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