Forex robots (EA) have become very popular ever since the MetaTrader 4 trading platform was released. The numerous commercial EA that are available and the frequent scams do not make it any easier to find a robot that genuinely works well.
To find an EA that fits your trading style and risk tolerance, you need to analyse various statistics such as maximum loss (drawdown), profit ratios, consistency, and the risk-to-reward ratio.
Forex trading is highly risky; you can lose all of your money, even if you use a robot with good statistics. Before using a robot with a live (real) trading account, you should understand how much financial risk you are willing to take.
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The most profitable robots are often the riskiest. As a result, you select an expert advisor based on your risk acceptance.
Before you invest your money, you must test the robot with a demo account and perform a backtest using historically accurate market data.
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How do I find an EA’s statistics?
To avoid scams, never use an EA which has not been tested by an independent website. It is best to filter EAs using stats from independent sites such as myfxbook.
Even though the items match to be brilliant on these websites, past performance is no guarantee of future performance. Automated forex trading is highly risky.
Robots do not perform well in all markets (volatile, trending, range-trading). To achieve a good profit, it is not enough to simply select the robot that produces the best results.
You must also understand how it works in order to change the settings (optimise) based on the type of market you want to invest in and your risk tolerance.
That’s why you should first run EA on a demo and optimise it. Simply saying, because EA did badly on the first day or first backtest doesn’t mean it’s trash. After a few more tests and optimization, it could work better than ever.
If your objective is to purchase a robot to let it run on its own without any supervision, you will most likely lose your money after a while. The perfect robot that runs well in every type of market does not exist!
Analyzing an Forex Expert Advisors stats
1)The Profit Factor
One of the most important statistics is the profit factor. It enables you to answer an important question: will the robot be profitable?
Profit is important because it demonstrates the relationship between profit and risk.
A profitable robot that risks your entire account balance is not ideal.
To decide the profit factor,
If the profit factor is less than one, it must be removed immediately; instead, select EAs with a high profit factor.
2) The drawdown (max drawdown, average drawdown, drawdown recovery)
A profitable robot is useless if it takes too much risk on each trade. Drawdown is a critical risk indicator. It displays the percentage of maximum loss since the previous high point.
This can give you an idea of how much your account might drop if the robot gets into trouble.
The first step in calculating drawdown is to examine an equity curve chart. A rising curve indicates that the robot is profitable; however, if the curve is agitated, with frequent and large peaks and troughs, the robot is extremely volatile.
A volatile robot will almost certainly have a large drawdown and pose a higher risk. You can therefore quickly filter the robots by selecting charts that display a smooth equity curve.
Maximum drawdown ; Selected the maximum loss since the previous high point. A 50% drawdown, for example, means that the robot lost 50% of the account value from its peak. For example, if you opened a trading account with £10,000 and starts to use this EA at the wrong time (just before the drawdown), you would have lost 50% of your capital from the start!
The average drawdown ; compares the various drawdown amounts of the EA Assume the expert advisor experienced three drawdowns, the first of which was 10%, the second of which was 4%, and the third of which was 12%. To determine the average drawdown, add the three drawdowns and divide by three (10% + 4% + 12%) / 3 = 8.7%. The average drawdown is interesting to examine because it shows you what you can expect to lose during a drawdown period, whereas the maximum drawdown shows you the worst-case scenario.
Drawdown recovery; is a measure of how quickly a trading system recovers from a period of drawdown (in time or in a number of trades). As you might expect, it is best to select an EA that can quickly return to positive territory after a loss. In contrast to a riskier robot, a less volatile (and less risky) robot will recover from a drawdown slowly and steadily.
This is pretty much self-explanatory.
4) The risk-reward ratio
The risk-reward ratio indicates an EA’s willingness to take chances. An Expert Advisor with a 5-pip take profit and a 40-pip stop loss has an 8:1 risk-reward ratio. To be profitable, it must achieve a success rate of at least 89%.
The EA strategy defines how much the risk-reward ratio changes, so take it with a grain of salt.
Some EAs on the market, especially scalpers, have a risk-reward ratio of 15:1 or higher, stating that they employ a high-risk strategy. A high risk-reward ratio does not always imply that the EA is losing money. With a 15:1 risk-reward ratio, an Expert Advisor with a 95% success rate will still be profitable, but if that rate drops to 93%, the EA will lose.
Most EAs include options for risk management, such as adjusting the maximum SL and TP, which allows you to improve the risk-reward ratio. However, before changing the settings, you should run backtests to make sure that the modifications have no effect on the strategy.
How to Identify and Avoid FOREX EA Scams and Fraud
A Forex Expert Advisor(EA) is a type of trading software that can make automated trading decisions for traders. So, the trader can gain more profits, and the trading continues without the trader being present all the time.
However, as the EA became popular, it also became a target for scammers. Nowadays, many frauds showcase their EA products online to earn easy money, but if you buy them, the only one making easy money would be the scammer.
- Learn More about Expert Advisors (EA) – HERE
So, it is essential to recognise and avoid these forex EA scams. Scammers try their best to fool you. But there are some obvious clues that you need to look out for.
High drawdown figures
When traders look at the trading result chart of an EA, they make the mistake of only studying equity curves. You should know that most EAs have an upward equity curve. with an EA modelling quality of 99% Still, keep in mind that the EA is most likely useless if the drawdown figures are also high.
Most traders overlook drawdown figures, but you need to avoid any EA with high drawdown rates. You can easily recognise this on EA that uses a martingale strategy.
Long open trades strategies
Many traders prefer long-term trading strategies, so this point does not seem fishy initially, making it easy to fool people. Long-term trades certainly have their benefits.
However, only if the period is confined to a few days or months. It doesn’t make sense when an EA holds trades for several years. No matter how adequate the backtesting results show, it is always the best choice to avoid this EA.
The number of people using them indicates how popular scalping strategies are. Still, expert advisors that use scalping strategies don’t work most of the time because of the sensitivity of this strategy to spread and latency. However, if you have low spread and very low latency, these EAs work like a charm.
Most traders depend on test results to know if a robot is useful or not. Still, you may not know that the MetaTrader 4 Strategy Tester doesn’t include latency and variable spread tests, so these EA will work very well on the backtest.
This is why you may see scalping strategies working on one broker but failing on another. Your trades will be ruined if your broker doesn’t have the requirements an EA needs. So this isn’t much of a scam, right? No, because some sellers’ minimum requirements don’t exist except for the strategy tester.
Unrealistic marketing messages
Some FOREX EA sellers promise things that are too good to be true, such as high percentage growth returns, like profit screenshots of millions of dollars. You need to know that making returns is not easy in forex trading, even if you are experienced and lucky. It is sporadic when traders make more than a 30% return in a month. If an EA seller is claiming high returns, you need to steer clear of it. If EA can make a profit of upwards of a million dollars, why do they sell them?
Untrustworthy Myfxbook Account
You can watch the trading results of an EA robot on sites like Myfxbook. It is a platform for the FOREX trader community where traders can analyse their trading accounts and share their trades and results. You can observe the EA’s trading chart by visiting the Myfxbook account of the EA. This page comprises every detail about the trading of the specific EA, from deposits, balances, drawdown, gain, equity, withdrawal, profit, last update time, and more.
If you analyse the chart carefully, then you can understand if the account is genuine or if it is a scam, such as:
If the data is verified, you can trust the chart; otherwise, it is untrustworthy. Check the top of the map to see if your track record and trading privileges have been verified.
This is usually ignored, but it is critical if you want to identify and avoid scams. Assume an account has been performing admirably for some time. However, when it begins to lose profits. They stop updating the chart and only show the times when it was profitable. As a result, buyers may be easily duped into believing that it is a profitable EA.
Always check the chart’s most recent update time. It is fine if it has been updated within the last few hours or days. However, if it was updated months ago, it is more likely to be a fake.
Low-Quality Content on The Website
Anyone who wishes to sell products online almost always has a well-designed website that attracts customers and assists visitors in quickly finding what they are looking for (There are scammers with a beautiful site). However, if you search for EA online, you will come across some unhelpful websites. You will not be able to clearly find anything, such as features, plans, and product descriptions.
Never buy from sellers; they only advertise and sell on places like Telegram, Youtube, Facebook, etc. Because 99% of the time, it’s a scam, and you probably won’t receive an EA or a reply from the seller.
How accurate are trading bots?
There is often a more than 100% difference between market results and trading results. On an hourly interval, the algorithms do much better, with some months of profits and some periods of outperforming the markets. However, on average, all of them are worse than the buy-and-hold strategy. 07
Which Free forex robot is the most profitable?
So, if you are interested in trading gold or other precious metals, Forex Fury might be the most profitable forex robot.
how much does a forex robot cost
If you are interested in buying a popular off-the-shelf forex robot, the 1000pip Climber System costs as little as $97 for a lifetime subscription.
Do forex robots make money?
If you want a strictly technical answer, yes, forex trading robots do work. The thing is, though, they are tools. And like all tools, the outcome depends on what they are used for and how well they are used.
Do Free forex robots work?
Free Forex Robots are a great place to begin your trading career. It also assists you in becoming acquainted with autotrading. While it is not recommended for use with live accounts, its primary goal is to introduce traders to automated trading.