Forex Robots - Curve Fitting is the Reason 99% Sold Don't Win

By Kelly Price

The vast majority of forex robots lose money and this is despite the fact they claim to have made big money. If you are wondering why they lose, its due to curve fitting. If you don't know what it is read on.

First of all let's reveal the truth about all those stunning track records you see with huge gains that look to good to be true well, they are. The reason they look so good is they have been designed looking backwards, testing over price action that's happened!

That's it - there actually made up on paper and never been traded. Track records normally carry this standard warning.

"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading...."

It then goes on for bit longer, explaining how these track records don't indicate future profits - but that's obvious, they are worthless - like most forex robots.

Now let's look at why simulations never work in practice.

Some vendors don't care if the system makes money or not - but others do and genuinely try to make it work and simulate a system but they make they end up bending the rules to fit the data and this of course wont work.

Data never repeats exactly the same again so the fact that you have bent the rules to fit one piece of data doesn't mean it will work on another piece of data and of course, when your trading you can't change the rules.

Any trader if they are looking at forex robots or building their own system needs to be mindful of curve fitting.

To avoid it look for the following in a track record if oits curve fitted it should only have a few rules and they should be the same all the time, for all market conditions and work on all currencies in the same way.

The above will ensure a robust system but you wont find that in most of the robots you see for sale online

Finally

Forex robots have a bad reputation - but there are some real track records out there, with good solid real gains and this means they have some results you can look at and see - don't ever trust a forex trading system with a simulated track record, as its probably curve fitted.

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