There are some simple common sense rules that have to be followed when looking for automated trading systems. These rules will simply protect you from being ripped off if you lack a real understanding of the forex market and why an automated trading system in particular will not work. In analogy, you don’t need to know why fire burns in order to keep yourself away from a fire, it is just “common sense”.
The first rule is my personal favourite and the first one that gets killed when people become blinded by greed. If it is too good to be true, it probably is. You knew that already ? So apply it ! The main problem with this rule is that the limits of “too good” get stretched when people believe that they are ignorant of what “too good’ actually is.
Commercial ea sellers usually focus their marketing in such a way that people feel like their missing out on something that they did not know which is not offering “unreal results”. For example, if I told my mother she could make 40% a year in the forex market with no risk she would feel that it is too good to be true because most risk free investments are below 7% a year. I could push her into it by telling her that it is a matter of she “not knowing” it can be done. Do not fall into this ! When I change into a more realistic setting and tell my mother that she can make 40% a year with a 20% possible draw down and 0.01% chance of total equity loss, then we are singing to a different tune. Risk now seems realistic for an investment with that profit setup.
The next thing is that the burden of proof is on the ea creator. You should not believe a word the testimonials or the ea sellers says, believe the hard evidence, live accounts with investor access, nothing more, nothing less. If the ea seller claims he can make 10% average a month, then demand to know how many months he took that average from and where you can find proof of that. No proof beyong reasonable doubt, no purchase, that simple.
Finally think about the ea seller claims and think if it is possible for all the people that bought his system to achieve those results. Can we all make 1000% a year on the forex market ? No ! where will the money come from ? Apply your common sense ! 90% of the people in the forex market have to lose money, it is an essential characteristic of the market. Can a 100 USD product turn 500 USD into a million in five years ? Obviously not ! Then why do people buy them ? They are not using their common sense. If you do not want to second guess your choices and battle your greed then start by increasing your education level, fear and greed are removed by having understanding.
If you would like to learn more about choosing commercial and free expert advisors as well as read reviews of commercial and free expert advisors I have bought and traded please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !