Automated trading systems include Forex robots and trading signal software. The latter is a milder type of robot. Instead of performing the trades on behalf of the human like a robot does, it will just create alerts and signals which will indicate the possibility of a trade. It does not decide on the course of action; it simply suggests them. It only performs the analytical task and leaves it to the trader to evaluate the merits of the price pattern and eventually take the trade or not.
The problems associated with forex robots and trading signal software are one in the same. The programming is based on arbitrary and unchanging rules or algorithms, which will, when applied to the constantly shifting and complex market environment, prove to be ultimately useless. All trading robots and EA's have broken down and the Forex industry is littered with Forex trading systems and schemes that failed, especially trading signal services.
In fact, it is not difficult at all in any market to generate what could look like accurate and profitable trading signals. Combining and rearranging a bunch of technical indicators a few times will invariably result in a sample of trades that have produced excellent returns in the past. These results are over optimised and rarely are they taken and placed on a second sample of data, which confirms the validity of the systems results.
Out of sample testing is vital, and you need to see the proof of this before putting your hard earned funds into a system that doesn't provide this confirming record of performance.
One can only evaluate the validity of any given trading signals after the fact, if you do not get confirming proof over different data samples and a walk forward of results, this is of course as hindsight is always 20/20 vision.
With the current technology, machines can actually predict a good trading opportunity, based on a series of signals or market conditions being met and back tested to show its potential. The signals are based on using limiting parameters, and it does not yet have the flexibility and analytical capability of a human brain, although there is study into neural networks as trading applications, but these are decades away for being commercially available to us the poor private trader.
You see software cannot look forward, it cannot weigh and balance the different factors affecting the market, it cannot add sentiment to the market and can only apply lagging data and indicators that show what has happened, not predict what will happen.
Software cannot analyze the influence of time accurately or the political and economic climate currently. It does not have any power to take the market psychology into consideration and make useful predictions from it. These machines only have a fixed and undeviating set of programming rules and trading algorithms. They will break down over time.
Having a predefined and fixed set of rules prevents automated systems from being able to adapt to changes that have not been foreseen. It is impossible to build an EA that retails for $200 that has these capabilities, be serious.
You are buying into the dream, hope and greed which are overcoming the purchaser of the systems common sense, once again.
Their basic mechanism stays the same. In contrast, a human trader, with his unrivaled brain and analytical capacity, can go beyond the suggestions made by technical indicators and correlate them with an understanding and analysis of market conditions; this is called experience and is where machines fail to learn from past conditions, this confirms their validity. If the indicators prove to be invalid, humans can surpass them and make a different series of decisions. This provides an added skill set built up over time from having experienced, watched and involved with the price and indicator movements. Do not rely on mindless and ineffective robots.
It is here that the next logical step in analyzing the usefulness of robots comes into play. If automated systems do indeed perform as they are advertised, it would simply be illogical for their marketers to waste a lot of time trying to sell them to retailers through expensive and time-consuming online advertisements that takes much effort to set up. Simply, they should just use these automated tools to make millions for themselves by applying them to actual trades.
Trading automatically, without lifting a proverbial finger, would create so much more money much more easily than expending a lot of hard work advertising their product. Where is their credibility if even veteran, big time traders still look at charts and do not rely on robots? Trading not marketing, this is the crux.
A product which produces profit automatically is unprecedented, and it cannot surely come from some peddler offering it for a measly one off payment, if it worked it would be better to give it away and share in the future profits, it would be so much more lucrative.
This does not happen because the robot does not work so the marketer or owner wants a payment now as it will be obsolete in a few weeks or months.
We have tested hundreds of robots and even those with amazing advertised results like €Million Dollar Pips' have fallen over in the real world.
It is no wonder why long time traders still rely on common sense, patience, study, correct attitude, and perseverance as foundations for their trade instead of these fraudulent cure-alls.
The problems associated with forex robots and trading signal software are one in the same. The programming is based on arbitrary and unchanging rules or algorithms, which will, when applied to the constantly shifting and complex market environment, prove to be ultimately useless. All trading robots and EA's have broken down and the Forex industry is littered with Forex trading systems and schemes that failed, especially trading signal services.
In fact, it is not difficult at all in any market to generate what could look like accurate and profitable trading signals. Combining and rearranging a bunch of technical indicators a few times will invariably result in a sample of trades that have produced excellent returns in the past. These results are over optimised and rarely are they taken and placed on a second sample of data, which confirms the validity of the systems results.
Out of sample testing is vital, and you need to see the proof of this before putting your hard earned funds into a system that doesn't provide this confirming record of performance.
One can only evaluate the validity of any given trading signals after the fact, if you do not get confirming proof over different data samples and a walk forward of results, this is of course as hindsight is always 20/20 vision.
With the current technology, machines can actually predict a good trading opportunity, based on a series of signals or market conditions being met and back tested to show its potential. The signals are based on using limiting parameters, and it does not yet have the flexibility and analytical capability of a human brain, although there is study into neural networks as trading applications, but these are decades away for being commercially available to us the poor private trader.
You see software cannot look forward, it cannot weigh and balance the different factors affecting the market, it cannot add sentiment to the market and can only apply lagging data and indicators that show what has happened, not predict what will happen.
Software cannot analyze the influence of time accurately or the political and economic climate currently. It does not have any power to take the market psychology into consideration and make useful predictions from it. These machines only have a fixed and undeviating set of programming rules and trading algorithms. They will break down over time.
Having a predefined and fixed set of rules prevents automated systems from being able to adapt to changes that have not been foreseen. It is impossible to build an EA that retails for $200 that has these capabilities, be serious.
You are buying into the dream, hope and greed which are overcoming the purchaser of the systems common sense, once again.
Their basic mechanism stays the same. In contrast, a human trader, with his unrivaled brain and analytical capacity, can go beyond the suggestions made by technical indicators and correlate them with an understanding and analysis of market conditions; this is called experience and is where machines fail to learn from past conditions, this confirms their validity. If the indicators prove to be invalid, humans can surpass them and make a different series of decisions. This provides an added skill set built up over time from having experienced, watched and involved with the price and indicator movements. Do not rely on mindless and ineffective robots.
It is here that the next logical step in analyzing the usefulness of robots comes into play. If automated systems do indeed perform as they are advertised, it would simply be illogical for their marketers to waste a lot of time trying to sell them to retailers through expensive and time-consuming online advertisements that takes much effort to set up. Simply, they should just use these automated tools to make millions for themselves by applying them to actual trades.
Trading automatically, without lifting a proverbial finger, would create so much more money much more easily than expending a lot of hard work advertising their product. Where is their credibility if even veteran, big time traders still look at charts and do not rely on robots? Trading not marketing, this is the crux.
A product which produces profit automatically is unprecedented, and it cannot surely come from some peddler offering it for a measly one off payment, if it worked it would be better to give it away and share in the future profits, it would be so much more lucrative.
This does not happen because the robot does not work so the marketer or owner wants a payment now as it will be obsolete in a few weeks or months.
We have tested hundreds of robots and even those with amazing advertised results like €Million Dollar Pips' have fallen over in the real world.
It is no wonder why long time traders still rely on common sense, patience, study, correct attitude, and perseverance as foundations for their trade instead of these fraudulent cure-alls.