Forex Trading Robots - Do The Risks Outweigh The Benefits?

Who would not want a share of the $3 trillion market turnover that occurs in the Forex market everyday

? If you are a novice who is learning the ins and outs of the Forex trading market and having difficulty, you may well have thought about using a Forex trading robot to help you get started.

There is a lot of chatter on the net about how good these robots are, and how a lot of people have made a profit from using them. But how good are they, really? Are they really so perfect that we do not need to be concerned with manual trading again? Contradictory to what most people think, Forex robots do also have downsides.

What are these negative effects?

Heavy reliance on the robot

A Forex robot is there to assist you, not to completely take over your trading for you. A common mistake made by traders is to let automated trading systems do the work for them, and never spend time learning manual trading. This can turn into a trading disaster in the long run.

If you relied solely on a robot, what would you do if your computer broke or your robot suddenly stopped being profitable? Would it be the demise of your trading career? Having sufficient knowledge in trading manually to fall back on could be vital if you wanted to succeed in Forex.

Another problem is that many traders who use automated trading systems, would just leave them trading unmonitored. Automated trading systems, specifically Forex robots, have a feature called optimization. It permits traders to check on previous trades, and determine how trades have been won in the past. This allows your system to improve its strategy.

Believing the robot is perfect

There is no such thing as a perfect trading system. There are some Forex robot vendors that say their robot has zero losses under its belt. This is a bold, and highly unlikely, claim.

Even if there are Forex robots that have as much as 95 to 100 percent success rate, relying on them too much and letting them perform all trades without the trader getting involved could lead to disaster. Your future as a Forex trader could be put in a great deal of jeopardy if you believe the hype of these robots, and find your trading account gets seriously depleted as a result.

Bad trading strategies

Some Forex robots actually use bad money management strategies, like the stop loss could be larger that the target. Others would not have any trading strategy at all! Some would also not allow sufficient back-testing, which is something that traders should be conscious about.

Bottom line is that no automated trading robot could make you rich overnight, or in weeks even. The Forex market is unpredictable, and can be exciting as a result. But to succeed in this field, miracle-workers like automated trading robots are not the answer. Of course, they can assist and provide support in Forex trading in being just one part of a larger trading strategy. In the long term, a good trading mindset, skill and experience are much more important to successful Forex trading.

by: Gen Wright

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