Trusting An Automated Trading System

Most forex retail traders start their journeys in the market by taking one or several different learning approaches towards trading. Most of these approaches involve either books, seminars or other forms of regular trading education. In my experience, there is a serious gap when it comes to the way in which most traders learn the basics of trading.

For one, it is impossible to learn most important things about the market in theory because the psychological factors that are involved in manual trading systems are never really learned until the trader actually experiences the market with his or her own money. People often think that all psychological factors are eliminate by the use of automated trading systems. This is not true, there are several important, emotional factors that are not experienced in manual trading that become important when using automated trading systems.

The gap comes when people start to try to use blackbox systems in automated trading. When someone uses a system that they do not truly know, even if the system is profitable, they are doomed to fail. This is because when you do not know what you are trading, you are bound to flee when the system goes into temporary draw down. But then, if the system is not really profitable and it goes into draw down and eventually wipes the account, the trader will become afraid of loses and he or she will quickly quit profitable system early later on.

The solution ? The trader should know the system and know if it is profitable by the merits of it’s logic and the traders knowledge. The trader should understand the robots logic deeply and really know the reasons why this logic has long term profitability. The trader then knows the system, it’s weaknesses and it’s strengths, so the trader knows the draw down scenarios and for how long they are bound to last. So no, you cannot be an ignorant trader with no knowledge of the markets and be profitable in forex with an expert advisor. If you do not want to take a long time to learn about trading itself and maybe even programming if automated systems really interest you, then this is not the business for you.

If you want to become profitable using an automated trading you should then take a look at systems with very simple logic you can easily understand (weekly breakout or turtle system) and then start demo trading it and realize how automated systems work. If you also want to learn more about commercial and free trading systems I have used, reviewed or programmed 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 !

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