When looking to buy a trading robot we have to wade through plenty of sales pages. These pages show us that we can make $10,000's just by buying there automated system.
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.
There are some pitfalls the developer has to be aware of such as the time period the mechanical system has been tested, as all markets change over time. If the developer has on tested their EA on data that is favourable to their mechanical system, then the EA will only be profitable while the same market conditions continue.
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.
When buying a trading robot we need to look at who takes our payment. Good system developers use clickbank marketplace and this is good for the buyer. If we are unhappy with the robot clickbank will give us our money back (within our money back guarantee time limit).
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.
A word of caution - the data provided by Metatrader 4 is not long enough or detailed enough to provide high quality backtesting results. You will need to get high quality Tick Data to backtest efficiently and lots of it.
By accurately testing we can see if a robot is good or not, but before we test we need to look to see if the trading robot has a stop loss as this gives us control of our trading risk.
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.
If my initial testing shows me that the EA fails on either point I will get my money back and if the robot passes I will test it in more detail. My testing uses tick data and software patches to produce 99% modelling quality testing.
I run tests on short time periods and this can be from 2 weeks to up to 3 months as I am looking to test an EA to select the correct settings for my forward trading. I then backtest for 2 weeks and find the most profitable settings for this 2 week period.
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 selecting an EA that can be tuned to market conditions and having the skills to be able to do high quality backtesting will give you the edge you need to select expert advisor's that will be profitable over the long term.
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.
There are some pitfalls the developer has to be aware of such as the time period the mechanical system has been tested, as all markets change over time. If the developer has on tested their EA on data that is favourable to their mechanical system, then the EA will only be profitable while the same market conditions continue.
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.
When buying a trading robot we need to look at who takes our payment. Good system developers use clickbank marketplace and this is good for the buyer. If we are unhappy with the robot clickbank will give us our money back (within our money back guarantee time limit).
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.
A word of caution - the data provided by Metatrader 4 is not long enough or detailed enough to provide high quality backtesting results. You will need to get high quality Tick Data to backtest efficiently and lots of it.
By accurately testing we can see if a robot is good or not, but before we test we need to look to see if the trading robot has a stop loss as this gives us control of our trading risk.
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.
If my initial testing shows me that the EA fails on either point I will get my money back and if the robot passes I will test it in more detail. My testing uses tick data and software patches to produce 99% modelling quality testing.
I run tests on short time periods and this can be from 2 weeks to up to 3 months as I am looking to test an EA to select the correct settings for my forward trading. I then backtest for 2 weeks and find the most profitable settings for this 2 week period.
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 selecting an EA that can be tuned to market conditions and having the skills to be able to do high quality backtesting will give you the edge you need to select expert advisor's that will be profitable over the long term.
About the Author:
Find out how to make forex profits as an forex auto trader and make profits on auto pilot. Or check out the forex trading basics at my website forextradingtutorial.biz and start your forex tutorial.
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