FOREX Trading in the 21st Century – It’s Gone AI

About 70% of forex trading is algorithmic.   

For a new investor that’s not the best news. Which is why an increasing number of savvy newer investors, the ones that took the time to do their research, or at least listened to some reliable advice, are diving into the world of AI and FOREX robots. 

A FOREX WHAT?

A FOREX robot is pretty much what the term describes; a robot – in the form of software – that performs trades instead of a human trader. These AI based trading robots rely on built in trading algorithms and trading signals that allow it to make independent trading decisions. The combination of these signals allows the trading robot to decide the optimal time to buy or sell a currency pair and then facilitate the trading process itself.

Who Makes Use of FOREX Robots?

It’s not likely that you’ll hear of many ‘hardcore’ FOREX traders extolling the virtues of AI FOREX or FOREX robots. These are the guys who take great pride in how many hours they spend watching the markets, investigating theories and weighing up all kinds of scenarios. These guys – and gals – are hardcore, and for that we salute them.

FOREX robots are for the rest of us. New traders who are just learning about FOREX. Busy people with other businesses to run, families to raise, lives to live. They are for people who want to make money FOREX trading, and are serious about doing so, but don’t have the time to spend 12 hours a day sitting in front of a computer screen – or two computer screens, a set up many hardcore FOREX traders run – to do so.

It’s also great for those who want to build wealth by creating a diverse portfolio. As Meet Benjamin members learn – or will learn – is that the stock market and traditional investment options are not the only game in town. But it can be a good ‘game’ and FOREX robots can be a great way to leverage that potential.

Like anything else, the promise of making money has led to all kinds of snake oil sales people crawling out of the woodwork offering substandard AI FOREX systems that won’t make anyone money except the people selling them. And it can be hard to tell the difference between a legitimate FOREX robot and a scam. That’s where the responsibility to do proper due diligence and do some research comes in.  

What is the Best FOREX Trading Robot?

What do you need to look for in a FOREX Robot? Here’s a look at what you should be searching for – and what you need to avoid – when you are researching what a FOREX robot could do for you and which of the increasing number of AI FOREX options you should trust with your hard-earned cash.

Look for Real Proof

You should always avoid FOREX trading robots that only offer back tests as verification of their profitability.

Backtests are simulations, made only against tick data (price data from a broker or third party source). They do not offer an accurate or true reflection of trading in actual market conditions. Delays in trade execution and slippage can severely affect the profitability of the FOREX robot.

Another great danger of relying on back testing data is that it is relatively easy to “curve fit” or over optimize the settings on the trading robot to suit the available data.

So what you really have is a FOREX trading robot that has been deliberately optimized to suit historical data, not one that is flexible enough to adapt to changing current market conditions. The FOREX market, like all markets, changes “personality” over time and hence, historical data is in no way a true indication of what will transpire in future.

Look For Live Trading Statements, Not Demo Accounts

Demo accounts are just that, demos. They do not offer an accurate representation of the accuracy – or the speed – of trade executions, both of which are hugely important. No matter what the bot’s creator might tell you even if price data is the same, the trade execution will vary enough to greatly affect your profitability.

When looking for live statement proof, the more the better. And understand, trading is risky, so a real live statement is not going to show amazing returns every day, because that does not happen. What you are looking for is good performance over time, not perfection.

Avoid FOREX Robots that Have a Win to Loss Ratio Greater than 80%

Some people might say 70% instead, but that is something up for serious debate. The reality is that to achieve those kinds of exceptionally high win-loss ratios you will need to be comfortable carrying losses for an extended period of time before they may – or may not – eventually realise a profit. This often indicates that trades either do not have a stop loss in place or carry a very wide one, either of which is potentially dangerous to your trading account.

Look At the People Behind the Offer

At the end of the day a FOREX robot is a computer program. Lines and lines of code. They are boosted by AI, which is advancing every day, but they still need real human financial brains involved in their creation and maintenance. The best FOREX robots are created in a collaboration between the best coding and the best financial minds. If there is no information available about the people behind the bots that itself should be a huge red flag.

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