Ok daggerdirk, I assumed from your writing that you are a strong advocate and user of EA/Robot.
First off I cannot see myself using EA/Robot as there seems to be daily none stop trail of complaints of frauds & scams, not only here at the FPA, but all over the other forums.
Tell me, why do Traders use EA/Robot to trade forex?
I want to understand what it is that makes trading with use of EA/Robot so attractive?
Is it really that profitable to use for forex trading?
As an example, how much initial capital is required in order to justify running an EA/Robot?
And from that initial deposit, how much can the EA/Robot be expected to make per week/month/year?
I am not being cynical here with the above questions, but is extremely curious; yah! So, please enlighten me....especially with the last two questions.
Cheers!
Your fears are well founded but I will try to stay on the positive side of the subject.
Basically, the BEST way to win at the EA game is to pay a programmer to create an EA that use your manual trading strategies.
If you don't have one, you can buy some strategies or pick up a few from forums, make it your own by tweaking it and then find a programmer.
For instance my trading strategy is soo subjective it can't be made into code an EA can execute however, I have found one manual strategy that I've purchased is working like a charm and now I'm having it programmed.
Will I sell it if it works like a charm as a trading robot? Nope!
I don't want it to end up on ebay for 99 cents!
It won't be a safe EA either. So I will have to stay up and babysit this puppy but ALL of the rules will be strictly adhered too. It will MAKE ME obey the rules before executing a trade. My emotions, greed and endless optimism will be kept in check thereby keeping me from numerous money draining bloopers.
Just one of the benefits of using an EA especially if you're an absence minded professor forgetting some of the trading rules or setups. An EA will not forget.
After I reach my goal I will share this EA with my fellow traders on my favorite forum and put Kangaroo back on my account so I can go about tending to my numerous projects.
Now as to how much to invest and how much you can make a week or month or year is a really a loaded question. I can go on for days and days on that question.
Basically it depends on how many lots you're gonna to trade and if it's micro, mini or standard lots. We're talking risk/reward here.
Your EA can generate .10 cents per pip or $1 per pip or $10 per pip it's up to you. With that said you can also loose .10 per pip or $1 per pip so forth and so on.
So lets say you have $1000 bucks and you're a HIGH RISK taker. You decide to trade minilots that earn/loose $1 per pip and risking $100 bucks per trade using a stop loss that reflects that initially.
The name of the game isn't making money. The name of the game is
staying in the game!
As long as you are in the game you can survive all year long. But if you keep getting nailed, it won't be long before you end up on the sidelines.
The correct EA strategy will give you an edge. That's what's needed to stay in the game as well as a trading plan that includes breakeven.
For instance I have a Trailing EA that measures momentum and volume as well as some other variables. What it does, as soon as I execute a manual trade, is zoom to breakeven quickly in order to what? Keep me from loosing money which keeps me in what? The game! 1st Priority is ...don't loose money!
The second thing it does as soon as it detects the direction or momentum winding down it closes out 80% of my trade and let 20% run IF there's still a little steam moving prices forward. The minute there's a pending retrace or other certain variables appear, it closes out the remaining 20%.
This sophisticated EA keeps me in the game and I haven't had a large loosing day yet. If I make a wrong call on a trade, I have two buttons I press and my position close and reverse instantly and my Trailing EA takes it from there so the most I've lost is $50 but gained $200.
Other important details....
- Indicators work best on 4hr and up TF's
- Use EA's on ECN brokers only
- Trade with trend
only ....confirm with 3 upper TF's going in same direction
- Make your EA obey that one rule by setting long or short only option
(I use SHI Channel indicator on 3 TF's and set my EA accordingly or execute manual trades in same manner)
- Turn off EA on high impact News Events
- Buy a software that sends you SMS Text on what your EA is doing. (use VPS service for EA's and not your home computer LOL!)
- Have an Account Sentry EA that will disable all trades once your equity reaches a predetermined amount that includes open negative trades. So if your EA has you in trouble and there's $600 bucks in your account and the EA has lost another $100 bucks your Account Sentry could activate at the $500 dollar threshold and close out your position as well as disable all future trades. (I now monitor directly)
- Don't buy any EA that has a large stop loss! (i.e. 300 to 1000 pips SL no I am not kidding)
My EA has a 20 to 90 pip stop loss to get it right. Lately, it's been 50 pips or quit. No draw downs allowed. So if the market goes up 15 pips and begins to turn back my Trailing EA slams right into the price and take me out at 12 or so pips. Why? Prime Directive: stay in the game by not loosing me money period.
I can go on and on but basically there's nothing wrong with EA's. Banks use a different type of EA's for efficiency and precision (obey all rules).
But it has to be your strategy that works. (or buy one or surf Fx Boards for a manual strategy that works well)
Trading can be fun whether you're using a robot or manual trade but EA's will keep you from fudging the rules thereby giving you an edge to stay in the game.
Hope this helps.