One recent development in online Forex trading, or retail Forex as it is often called, is the rise of algorithmic trading programs known as Forex robots. Once only available to large financial institutions with their own teams of in house programmers, algorithmic trading is now available to anyone who wants to try it thanks to programs like MetaTrader and TradeStation.
But I have to be honest and tell the reader here and now that algorithmic trading robots are not something I have personally used in my own trading, and my research into them suggests that these programs, whilst they will probably out perform most traders, will not out perform the best traders. In other words the average Forex robot will probably perform better than the average Forex trader (who will usually lose their entire account), but the best Forex robots will probably not out perform the best Forex traders. At least this is what the results of various trading competitions involving both humans and robots that I have seen seems to suggest to me anyway.
Even though algorithmic trading is not something I have been involved in myself I am not opposed to it in principle. There is, after all, no real difference between following a set of trading rules to the letter yourself and having a computer do this grunt work for you. Indeed, some trading systems can only be executed effectively by algorithmic trading robots; if your trading system is a short term system that requires the trader to be ready to take a trade at anytime, day or night, then it is probably not feasible to trade it without a Forex robot as the FX market is open 24 hours a day, 5 days a week and it is simply not possible for a human to watch the market all the time. Even sitting at a computer for 12 hours a day, that is just half a day, is probably way to much to be healthy, and 24 hours a day is simply impossible for a human.
I would however caution the reader against buying any Forex robots as if a robot really worked it would be quite unusual for someone to be willing to sell it to you, although I suppose it could happen. What I mean is it might happen that someone would be willing to sell you a great Forex robot, but the chances are that you would have to sift your way through lots and lots of junk before you were lucky enough to find one that really worked and a lot of time and money would no doubt be lost in the process. If you are interested in algorithmic trading and looking for a good FX robot I believe the best approach is probably to build a good robot for yourself. And as I mentioned in my article on black box trading my advice is do not even consider buying any 'black box' system where you are given the signals but not given the rules. In order to be able to trust any system you really need to know what the rules are and why they generate the signals they do.
On this section of the website I will present the reader with some ideas for Forex trading robots, that is, some trading strategies that work, trading strategies that I have tested and found evidence that they have an edge on short-term trading time frames, i.e. the very type of time frame robots are needed for. However in saying that, I should probably warn the reader that my research into trading time frames suggests that the shorter the time frame the greater the degree of randomness, and the greater the degree of randomness the less reliable the trading signal. However it is often possible to makeup for less reliable trading signals by increasing the frequency of the trades, providing of course that the edge is still significant enough to actually be tradable.
Algorithmic Trading Systems (Ideas for FX robots)-
As with all the other technical trading systems on this website, these are given to the reader free of charge for the reader to take, adapt and test thoroughly for themselves. Every trader must take personal responsibility for their own trades and trading decisions and there is no substitute for doing your own research. My ideas for Forex trading robots are as follows –
EUR/USD Trend & Momentum Bot. This robot would have taken 883 trades over a 6 year period. Each trade would have lasted exactly four hours.
