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Look on the internet for a trading robot and we will be bombarded with web pages with many sellers making the claim that with their robot easy money can be made. The robot alone is enough to make us rich!
These optimistic sales pages tell us that making money with a robot is easy to do, once it's set up we can watch the money come in.
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.
An expert advisor works through a mechanical trading programme. These are set trading rules that dictate the EA's behaviour. This could be either an indicator based strategy or a series of rules programmed by the developer.
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.
If the EA is subjected to different market conditions it stops making you money. You will need an EA that can cope with different market conditions or you can use different EA's in different market conditions.
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).
This allows you to test your EA thoroughly and if it doesn't pass your testing procedure you will always get your money back.
Once you have you EA set it up on your Metatrader 4 (online trading platform) you can start testing (In this case testing means running your EA over past data to see how it fared). When you start to test in Metatrader 4 you have access to the meta quotes data. This data is short term and is for all currencies in Metatrader 4. It is broken down into different time frames such as 1minute, 15 minute, 1 hour, 1 day etc.
Warning: the currency data that is provided by metatrader4 is not the highest quality. To test your robot properly we need to find extra tick data that we can use instead of the default data.
To get the best from your EA you need see how it tests. I look for 2 main things when testing. The first is the most important, can I set a stop loss. For me controlling my trading risk is the most important part of trading.
When a robot has a stop loss we can be sure that only the amount of money we are willing to risk is risked. Next we should look at the systems parameters, do we have the ability to control how the trading system behaves as this allows us to control the robot over different market conditions.
By looking to see if a robot has a stop loss and the ability to change with the conditions. This gives us confidence that the robot is sound and we should continue to test. If the robot does not pass these tests then we should ask for our money back.
To get our robot tuned to the market we have to decide on how long we wish to run our robot, this could be 1week, 2 weeks, 3 months or more. Once we have chosen this time we need to test the historical data to see what settings we should use.
I use these settings for the next weeks forward trading. After I have traded all week, I will backtest for another 2 weeks which includes the week we have just traded. In this way I keep my EA in tune with the current market conditions.
By carefully selecting a robot we are trading for the long term. Through back testing we can get the market to tell us what our settings should be. Now we can use robots to make us money.
These optimistic sales pages tell us that making money with a robot is easy to do, once it's set up we can watch the money come in.
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.
An expert advisor works through a mechanical trading programme. These are set trading rules that dictate the EA's behaviour. This could be either an indicator based strategy or a series of rules programmed by the developer.
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.
If the EA is subjected to different market conditions it stops making you money. You will need an EA that can cope with different market conditions or you can use different EA's in different market conditions.
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).
This allows you to test your EA thoroughly and if it doesn't pass your testing procedure you will always get your money back.
Once you have you EA set it up on your Metatrader 4 (online trading platform) you can start testing (In this case testing means running your EA over past data to see how it fared). When you start to test in Metatrader 4 you have access to the meta quotes data. This data is short term and is for all currencies in Metatrader 4. It is broken down into different time frames such as 1minute, 15 minute, 1 hour, 1 day etc.
Warning: the currency data that is provided by metatrader4 is not the highest quality. To test your robot properly we need to find extra tick data that we can use instead of the default data.
To get the best from your EA you need see how it tests. I look for 2 main things when testing. The first is the most important, can I set a stop loss. For me controlling my trading risk is the most important part of trading.
When a robot has a stop loss we can be sure that only the amount of money we are willing to risk is risked. Next we should look at the systems parameters, do we have the ability to control how the trading system behaves as this allows us to control the robot over different market conditions.
By looking to see if a robot has a stop loss and the ability to change with the conditions. This gives us confidence that the robot is sound and we should continue to test. If the robot does not pass these tests then we should ask for our money back.
To get our robot tuned to the market we have to decide on how long we wish to run our robot, this could be 1week, 2 weeks, 3 months or more. Once we have chosen this time we need to test the historical data to see what settings we should use.
I use these settings for the next weeks forward trading. After I have traded all week, I will backtest for another 2 weeks which includes the week we have just traded. In this way I keep my EA in tune with the current market conditions.
By carefully selecting a robot we are trading for the long term. Through back testing we can get the market to tell us what our settings should be. Now we can use robots to make us money.
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