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!
We are led to believe that easy money is waiting for us and all we need to do is buy their system.
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.
These indicators are tested over historical data to produce a system that will make a profit and by testing the system a developer can refine their trading robot until it is robust enough to make money.
We must be aware of a few pitfalls for the developer as all market conditions will change over time. If an automated system is tested only over a short time period, then the automated system will only produce results for this type of market condition.
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.
By looking at a how long a robot has been tested for will give us an indicator of whether a robot is robust. These sales pages will show the length of this testing and if the testing has only been done on a short time period this is an indicator of a potential scam.
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.
Check which vendor is processing the payment of the robot. Some vendors will give you your money back and some will not. Most developers use clickbank marketplace as they will always give you your money back.
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.
Warning: the currency data that is provided by metatrader4 is not the highest quality. To test your robot properly we need to find extra tick data that we can use instead of the default data.
First we need to open the trading robots systems parameters to see if we can use a stop loss as this is one of the most important parts of a trading system.
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 the robot does not have variable parameters or a stop loss then we should ask for our money back. If the robot does have these things we can start to do our testing using our tick data.
We are looking to use the historical data to provide the settings we will use in our forward trading. We do this by first selecting how long we wish to forward trade for. This could be weeks or months. Now let's say we are forward trading for a week so we would need to back test the previous 2 weeks with various settings.
The settings that gave us the best results over the 2 weeks are then used in our forward trading. After the week of forward trading we would repeat our back testing procedure. This would include the week we had forward tested. This new test would give us our settings for the next weeks forward 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.
We are led to believe that easy money is waiting for us and all we need to do is buy their system.
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.
These indicators are tested over historical data to produce a system that will make a profit and by testing the system a developer can refine their trading robot until it is robust enough to make money.
We must be aware of a few pitfalls for the developer as all market conditions will change over time. If an automated system is tested only over a short time period, then the automated system will only produce results for this type of market condition.
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.
By looking at a how long a robot has been tested for will give us an indicator of whether a robot is robust. These sales pages will show the length of this testing and if the testing has only been done on a short time period this is an indicator of a potential scam.
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.
Check which vendor is processing the payment of the robot. Some vendors will give you your money back and some will not. Most developers use clickbank marketplace as they will always give you your money back.
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.
Warning: the currency data that is provided by metatrader4 is not the highest quality. To test your robot properly we need to find extra tick data that we can use instead of the default data.
First we need to open the trading robots systems parameters to see if we can use a stop loss as this is one of the most important parts of a trading system.
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 the robot does not have variable parameters or a stop loss then we should ask for our money back. If the robot does have these things we can start to do our testing using our tick data.
We are looking to use the historical data to provide the settings we will use in our forward trading. We do this by first selecting how long we wish to forward trade for. This could be weeks or months. Now let's say we are forward trading for a week so we would need to back test the previous 2 weeks with various settings.
The settings that gave us the best results over the 2 weeks are then used in our forward trading. After the week of forward trading we would repeat our back testing procedure. This would include the week we had forward tested. This new test would give us our settings for the next weeks forward 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.
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