Article by James Carter

Automatic Forex trading software (a.k.a Forex robots) is generally regarded as either an invincible trading performer or a ‘too good to be true’ con. Among these pre-conceived notions, there exist numerous myths concerning the functionality and trading potential of these Forex robots. After reading this article you should be able to see the benefits, and the downsides, of using these programs.

1. Trading software never makes a losing trade

It is important to realize that these programs can never completely eliminate loss. Why? Because they are programmed by humans. While there are programs out there that boast 95% accuracy, these are rare to find and often have a limitation of some sort. For example, they may require you to have a deposit of ,000.

2. Forex robots can predict the market

There is an important distinction between being able to predict the future market and being able to analyze past and current trends. Despite any claims, Forex programs cannot predict future market outcomes – however, programmers are becoming more and more sophisticated in their use of trend-spotting software (e.g. using Forex news feeds to give the robot a list of possibility outcomes).

3. There is no such thing as 100% automation

And you would be right. However – many Forex robots today work on the Meta Trader 4 platform. Despite the setting up process (installing your Forex robot and tweaking some options), Forex trading can effectively become 100% hands free.

4. The more complex the program, the higher the gains

Unfortunately, this is not true. Often the simplest systems are the ones which work best. The good thing about simple systems is that they use algorithms which are based on solid information and not basing themselves on trend predictions. That said, complex systems are able to have gains unrivaled by simpler systems – these programs however cost well into 4-figures, unlike the simpler programs.

5. Success in demo-accounts = success in real accounts

This myth applies more towards the actual product sellers. There is a trend these days for vendors to display demo-account transactions on their homepages of their Forex robots. Keep in mind that with a demo account there is nothing at stake. This means that vendors can use more aggressive settings that could easily cost ones investment in real trading. Being demo-accounts, vendors can set-up multiple accounts and only show the ones where the software has successfully traded.

While this article was not written with the intention of putting you off automatic trading software, it is vital that you are aware of the mistruths often surrounding these programs. Automatic Forex trading software is an excellent tool for beginners and advanced Forex brokers alike – just remember, there is no such thing as a perfect trader.

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