There has been a lot of buzz lately about automated Forex system trading. It seems that a new Forex system that runs on auto-pilot is introduced every week. I make a living trading Forex so I'm always looking for new Forex systems that can make consistent winning trades, even through volatile economic conditions.
If you want to be successful and make money in automated Forex system trading, here are the top 3 things you should look for when evaluating this type of software:
1) How Does The Software Perform On Historical Back-tests?
Automated Forex trading software integrates with trading platforms like MetaTrader 4. Historical testing can be performed to simulate the trades and decisions the Forex software would have made against historical foreign currency exchange data. This can be a reliable indicator as to how the software might make trades in a live account.
An important statistic to look for in your back-test results is the win to loss ratio. The win to loss ratio will tell you how many times a winning (profitable) trade is made in proportion to how many times a losing trade is made. For example, if the automated Forex system made twenty trades, and 15 of those trades were winners, and five were losers, your win to loss ratio would be 15 to 5. This is also known as your hit rate; the software made 75% winning trades.
2) What Is The Performance Of The Software On Forward Tests?
Perhaps more important than back-test performance is forward test performance; or how well the software performs in current market conditions. Put simply, back-test results are generally useless if they are not verified with live forward trading results.
Most Forex trading brokers will offer demo accounts that let you make live trades without risking any real money. Due to the inherent risk of trading foreign currency, it is highly recommended that someone new to Forex trading use a demo account for the first few months to see the automated Forex system trading win loss ratio. Ideally, you want the Forex software to match or outperform the back-test results when trading on a live account.
3) Automated Risk Scaling
Automated risk scaling is possibly the most important factor to look for when evaluating automated Forex system trading software. Risk filters and indicators should be built into profitable Forex trading software. This will help prevent the software from trading in risky conditions and will help minimize the number of automated trades made by the Forex software during risky market conditions and reduce losing trades. - 16928
If you want to be successful and make money in automated Forex system trading, here are the top 3 things you should look for when evaluating this type of software:
1) How Does The Software Perform On Historical Back-tests?
Automated Forex trading software integrates with trading platforms like MetaTrader 4. Historical testing can be performed to simulate the trades and decisions the Forex software would have made against historical foreign currency exchange data. This can be a reliable indicator as to how the software might make trades in a live account.
An important statistic to look for in your back-test results is the win to loss ratio. The win to loss ratio will tell you how many times a winning (profitable) trade is made in proportion to how many times a losing trade is made. For example, if the automated Forex system made twenty trades, and 15 of those trades were winners, and five were losers, your win to loss ratio would be 15 to 5. This is also known as your hit rate; the software made 75% winning trades.
2) What Is The Performance Of The Software On Forward Tests?
Perhaps more important than back-test performance is forward test performance; or how well the software performs in current market conditions. Put simply, back-test results are generally useless if they are not verified with live forward trading results.
Most Forex trading brokers will offer demo accounts that let you make live trades without risking any real money. Due to the inherent risk of trading foreign currency, it is highly recommended that someone new to Forex trading use a demo account for the first few months to see the automated Forex system trading win loss ratio. Ideally, you want the Forex software to match or outperform the back-test results when trading on a live account.
3) Automated Risk Scaling
Automated risk scaling is possibly the most important factor to look for when evaluating automated Forex system trading software. Risk filters and indicators should be built into profitable Forex trading software. This will help prevent the software from trading in risky conditions and will help minimize the number of automated trades made by the Forex software during risky market conditions and reduce losing trades. - 16928
About the Author:
John Hansen has several years of foreign currency trading experience and banks on the best forex trading software to make profitable trades. Click here now to reveal the secret to profitable online fx trading!
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