Do Forex Automated Trading Systems Work? The Truth
Do Forex Automated Trading Systems Work? The Truth
Forex automated trading is without a doubt one of the shadiest and most dangerous markets I have come across during my life. When you begin your journey in automated trading you will find a lot of promises and a lot of potential which ultimately leads you to purchase products believing that you will achieve financial freedom within a few years or even months. With this article I want to inform you about the reality of the automated trading industry and the real potential and realistic profits that are achievable with forex automated trading systems. You will see how this market is absolutely over-hyped but you will also be able to appreciate that there is potential and that actual profits can be made in the long term by using automated trading systems.
So do forex automated trading systems work? Will you be able to take some of these systems sold on-line and amass a great fortune -or even only a monthly income- during a small amount of time? I have to tell you that the answer to this is no and the proof of this is all around you. I have been in the expert advisor industry since it started almost 4 years ago and I can tell you that I don't know a single person who has been able to achieve to live from an income received from commercial automated trading systems.
There are mainly two reasons why this has been the case. First of all, automated trading systems being sold are not created to be profitable in the long term, they are created to be sold and to create a system to sell is very different than to create a system to actually generate a long term income. You will find that most commercial systems are based on unsound trading tactics showing very little evidence of profitability and market adaptability. A higher danger is that most people are not aware that statistically significant results (years!) are needed to proof any like hood of long term profitability and they rush to buy systems that promise extremely high profits but that in the end deliver little or nothing. These systems which are only able to achieve profits in the short or medium term (results which are statistically meaningless) show their true face in the long term and wipe people's accounts.
The second problem is that most people who come into automated trading are under capitalized and feel that they can make a living starting with something like one or ten thousand US dollars, some expert advisor sellers even claim you can do this from 50 or 100 US dollars. The truth is that in order to achieve this you would need to achieve a long term performance that would be extremely high, something that the market is not going to allow because of the self-limiting character of market inefficiencies. It is no coincidence that the best traders and hedge funds in the world achieve average yearly profits of 20-30% and not higher. The fact is that achieving higher profits puts equity at a very significant risk due to market exposure, something that expert advisor sellers want you to believe does not happen.
Now, I am not saying that automated trading systems do not work. As a matter of fact, I live from trading these systems myself and I can tell you that there are systems which are able to produce money in the long term. These experts are designed with adaptability and capital preservation in mind and produce much less than what your regular EA seller promises you, but they actually do work with a high like hood of surviving in the long term (10-20 years). However automated trading is a difficult task that requires a lot of knowledge and understanding, something you should be prepared to do if you really want to profit in this market.
So in the end, do forex expert advisors work? I don't think you will be able to get from your 500 USD to 1 million in a few years but through adequate investment and the use of expert advisors with sound trading strategies you will most likely be able to achieve a long term performance of 15-25% per year with conservative risk and this in the long term will help you build wealth and diversify your other investments. Does this sound more realistic? Certainly making millions of dollars in a few years from small investments simply cannot be done and a lot of patience and a lot of knowledge and training are required to achieve long term profitability.