I must be an Idiot to Trade Forex Automatically

Trading Introduction

I have been a Trader of Shares, Futures and Foreign Exchange [Forex] for longer than I care to remember. I have made a lot of money and I have lost a lot of money. But throughout all the years, say 14,  I have longed for an automatic system to trade for me.

14 or 15 years ago this was unbelievable to even think about, but now in trading every body is using them. Or trying to use them. I say trying, because although I have used, tried, tested many, many automatic systems 99 to 100% of them fail.

In Forex it is understandably the rage, because this market trades for 24 hours nearly six days a week. It takes a lot of willpower to 'stare' at a pc screen for even 5 or 6 hours. But most Forex Intraday Traders are 'glued' to their screens 12 to 15 hours a day. Believe me, I have done this for many years and I know hundreds of traders that do the the same. It plays havoc with a social or a married life. But there are thousands of traders doing this week in, week out.

With Forex anybody with $50 can start trading. Most [but not all] traders use Technical Analysis/Trading. Where the Foreign Exchange Currency are displayed on a chart in various time scales, from 1 minute to 1 day or 1 week.The most popular Intraday time frame is 5 minutes to 60 minutes. Those who don't use Technical Analysis use Fundamental Analysis. The means rather than plotting a chart with things like Support & Resistance or Moving Averages & other Indicators the Trader uses the physical news about the currency.  The 'chart' packages are freely available from any of the thousands of brokers, especially the ones promoting Metatrader. This is a free charting package and is used from many thousands and probably millions of amateur and professionals alike.

The Forex Market is the biggest market in the world. Currencies of between 2 to 3 trillion dollars change hands every day. It starts off in Asia time zone with Australia, New Zealand & Japan etc, moving on to the European zone with London time zone being the biggest, when it merges with the New York, American market later. Then when the USA market is closing, it's time for the Asian market to start a new day again.

Forex trading has leverage for the trader. This means you can trade 100 to 200 times [or more] your account balance. This is great when your are winning, but it soon makes your account zero when you loose.

Automatic Trading

So most of the traders, especially the 24 hour Forex traders, want to find an automatic system. Metatrader makes this easy with software. They have built into it a function called an Expert Advisor, called an EA or Bot for short. Software writers make thousands of EA to try to trade like a person, or try to trade better than a human trader. In theory this is very manageable. An auto EA will take out all of the stress and the difficult decisions and just trade the market conditions as the software writer planned. That is in theory. I like many thousands of traders know in practice this isn't so. We have tested and tested thousands of EA Bots, all of them we hoped would set us free from watching the screen for many hours.

It doesn't matter if the auto EA is free or costing a lot of hard earned cash, most do not work. It is a sad fact of life they are hundreds of auto EA being sold online for $77, $97 or more, but 99% do not work. Or do not work for long, like 3 months or so. And to try to get these auto EA to work they ALL have a very big Stop Loss. That means for example, the EA will win say $10, but every time it losses it probably has a loss of some $200 or more!!

Part of trading is to accept a loss. That's OK, you cannot win 100%, I know plenty of traders that have a win to loss less than 50%. But their wins are bigger than their losses. That is the 'secret' of trading. But in all the thousands of EA I have tested and used, it is the other way around. So you back is 'against the wall' before you start. In many cases an EA will have a winning run of some tens of trades, but for a small amount and then when you are thinking, 'this is easy', the EA will have a huge loss, sometimes wiping out you whole account. Believe me, it happens every day.

Conclusion

If you thinking about trading, be very careful. It is the hardest job I have ever done and that includes being a commercial pilot. But it can be rewarding, if you learn to walk before you run. Actually you should never run at trading. There are Bold Traders and Old Traders, but never the same....

And do not put your trust into an automatic EA, until it's proved itself for 3 to 6 months on a Demo account.

I do not want to stop people from trading, it's a 'fun' way of making some money, but it is hard and it's very unforgiving, especially for the new people. There is no real structured learning path. Every one has to find a way from all  the 'stuff' online or from a broker or a mentor.