When you google expert advisor, you get page after page of carefully crafted sales pages. These pages promise to turn $1,000 into $10,000 in a matter of months. They offer you a hands free way of making a fortune.
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.
Making some money in the short term is not difficult however the difficulty with EA's is keeping your trading robot making money over the long term.
A trading robot has a set of trading rules programmed into the robot. These trading rules dictate how the robot opens and closes trades and these could be based on an indicator or a series of indicators.
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.
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.
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.
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.
This allows you to test your EA thoroughly and if it doesn't pass your testing procedure you will always get your money back.
Once we have bought our trading robot we have to set it up on the Metatrader4 platform. The robots manual will show us how to do this. Metatrader4 has currency data within it and this covers many currency pairs and time frames.
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.
Being able to control my stop loss allows me to feel secure that only the money I choose to risk is at risk and the second thing I look for is the EA's parameters; if I can control the EA's parameters I can fine tune my robot. This gives me more control in changing market conditions.
By looking to see if a robot has a stop loss and the ability to change with the conditions. This gives us confidence that the robot is sound and we should continue to test. If the robot does not pass these tests then we should ask for our money back.
To get our robot tuned to the market we have to decide on how long we wish to run our robot, this could be 1week, 2 weeks, 3 months or more. Once we have chosen this time we need to test the historical data to see what settings we should use.
I use these settings for the next weeks forward trading. After I have traded all week, I will backtest for another 2 weeks which includes the week we have just traded. In this way I keep my EA in tune with the current market conditions.
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.
Making some money in the short term is not difficult however the difficulty with EA's is keeping your trading robot making money over the long term.
A trading robot has a set of trading rules programmed into the robot. These trading rules dictate how the robot opens and closes trades and these could be based on an indicator or a series of indicators.
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.
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.
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.
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.
This allows you to test your EA thoroughly and if it doesn't pass your testing procedure you will always get your money back.
Once we have bought our trading robot we have to set it up on the Metatrader4 platform. The robots manual will show us how to do this. Metatrader4 has currency data within it and this covers many currency pairs and time frames.
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.
Being able to control my stop loss allows me to feel secure that only the money I choose to risk is at risk and the second thing I look for is the EA's parameters; if I can control the EA's parameters I can fine tune my robot. This gives me more control in changing market conditions.
By looking to see if a robot has a stop loss and the ability to change with the conditions. This gives us confidence that the robot is sound and we should continue to test. If the robot does not pass these tests then we should ask for our money back.
To get our robot tuned to the market we have to decide on how long we wish to run our robot, this could be 1week, 2 weeks, 3 months or more. Once we have chosen this time we need to test the historical data to see what settings we should use.
I use these settings for the next weeks forward trading. After I have traded all week, I will backtest for another 2 weeks which includes the week we have just traded. In this way I keep my EA in tune with the current market conditions.
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.
Ditulis oleh:
Unknown - Wednesday, October 10, 2012
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