Look on the internet for a trading robot and we will be bombarded with web pages with many sellers making the claim that with their robot easy money can be made. The robot alone is enough to make us rich!
These optimistic sales pages tell us that making money with a robot is easy to do, once it's set up we can watch the money come in.
When we use an automated system we are much more likely to make money in the short term but the difficulty is in finding an automated system that will allow us to trade over a much longer time period.
A programmer will use an indicator or many indicators to run their system. These indicators produce the inputs that a computer can read and then make trades.
To develop a trading robot a developer tests their systems with historical data and through continued testing the system is refined to produce a trading system that makes money.
A developer has to be aware of some pitfalls such as the length of time the system has been tested over. If the system has been tested over a short time period the system would only perform if these conditions continue but remember all markets change with time.
A system that has not been tested over a large time period will not be robust enough to survive these changes. Therefore we must find a trading robot that has been tested over the long term to ensure we maintain profitability.
Checking the sales pages of the EA you can see how long the EA has been tested for. This will not tell you whether an EA will be good to use, however it is a positive indicator. Scam robots are tested over recent data and over optimised to produce fantastic short term results.
By looking at the length of time the automated system has been tested for will give us an idea if our trading system will be able to cope with changing market conditions.
Once you have selected robot to buy and test you should always check who the payment merchant is and you should use EA developers who use clickbank marketplace as clickbank offers a money back guarantee (within a certain time limit).
Only buy from vendors who give you your money back, this gives us the opportunity to test our robot without any financial risk. If the robot is rubbish we can always get our money back.
When we have bought our EA we can set it up on the metatrader4 platform and once we have set it up we can start to test to see if the robot is any good. This can be done with historical data.
A word of caution - the data provided by Metatrader 4 is not long enough or detailed enough to provide high quality backtesting results. You will need to get high quality Tick Data to backtest efficiently and lots of it.
By accurately testing we can see if a robot is good or not, but before we test we need to look to see if the trading robot has a stop loss as this gives us control of our trading risk.
When we use a stop loss we are controlling our trading risk and another thing to look out for is the ability to use variable inputs in the robots parameter section. If we can, then the robot maybe tuned to different market conditions.
If my initial testing shows me that the EA fails on either point I will get my money back and if the robot passes I will test it in more detail. My testing uses tick data and software patches to produce 99% modelling quality testing.
I run tests on short time periods and this can be from 2 weeks to up to 3 months as I am looking to test an EA to select the correct settings for my forward trading. I then backtest for 2 weeks and find the most profitable settings for this 2 week period.
Let's say we are trading for 1 week. We would then backtest for the previous 2 weeks to get our settings. We then trade live for a week, afterwards we backtest for another 2 weeks including the week we have just traded. The results from this back test will give us our new setting for our trading for the next weeks live trading.
By carefully selecting a robot we are trading for the long term. Through back testing we can get the market to tell us what our settings should be. Now we can use robots to make us money.
These optimistic sales pages tell us that making money with a robot is easy to do, once it's set up we can watch the money come in.
When we use an automated system we are much more likely to make money in the short term but the difficulty is in finding an automated system that will allow us to trade over a much longer time period.
A programmer will use an indicator or many indicators to run their system. These indicators produce the inputs that a computer can read and then make trades.
To develop a trading robot a developer tests their systems with historical data and through continued testing the system is refined to produce a trading system that makes money.
A developer has to be aware of some pitfalls such as the length of time the system has been tested over. If the system has been tested over a short time period the system would only perform if these conditions continue but remember all markets change with time.
A system that has not been tested over a large time period will not be robust enough to survive these changes. Therefore we must find a trading robot that has been tested over the long term to ensure we maintain profitability.
Checking the sales pages of the EA you can see how long the EA has been tested for. This will not tell you whether an EA will be good to use, however it is a positive indicator. Scam robots are tested over recent data and over optimised to produce fantastic short term results.
By looking at the length of time the automated system has been tested for will give us an idea if our trading system will be able to cope with changing market conditions.
Once you have selected robot to buy and test you should always check who the payment merchant is and you should use EA developers who use clickbank marketplace as clickbank offers a money back guarantee (within a certain time limit).
Only buy from vendors who give you your money back, this gives us the opportunity to test our robot without any financial risk. If the robot is rubbish we can always get our money back.
When we have bought our EA we can set it up on the metatrader4 platform and once we have set it up we can start to test to see if the robot is any good. This can be done with historical data.
A word of caution - the data provided by Metatrader 4 is not long enough or detailed enough to provide high quality backtesting results. You will need to get high quality Tick Data to backtest efficiently and lots of it.
By accurately testing we can see if a robot is good or not, but before we test we need to look to see if the trading robot has a stop loss as this gives us control of our trading risk.
When we use a stop loss we are controlling our trading risk and another thing to look out for is the ability to use variable inputs in the robots parameter section. If we can, then the robot maybe tuned to different market conditions.
If my initial testing shows me that the EA fails on either point I will get my money back and if the robot passes I will test it in more detail. My testing uses tick data and software patches to produce 99% modelling quality testing.
I run tests on short time periods and this can be from 2 weeks to up to 3 months as I am looking to test an EA to select the correct settings for my forward trading. I then backtest for 2 weeks and find the most profitable settings for this 2 week period.
Let's say we are trading for 1 week. We would then backtest for the previous 2 weeks to get our settings. We then trade live for a week, afterwards we backtest for another 2 weeks including the week we have just traded. The results from this back test will give us our new setting for our trading for the next weeks live trading.
By carefully selecting a robot we are trading for the long term. Through back testing we can get the market to tell us what our settings should be. Now we can use robots to make us money.
About the Author:
Learn more about automatic forex trading. Stop by forextradingtutorial.biz where you can find out all about forex lots and how you can profit from them.
