With the increasing popularity of Forex trading, a new trend of FX Auto traders is evolving fast. There are many people, especially in today’s unstable economy, who see the Forex market as a safe-investment place. However, all of these new investors are united with the same issues – they don’t have any experience and have no willing to spend days and weeks to study it. So, these guys turn to Forex trading robots then.
Anyway, I am not going to tell you which strategy to choose, but all the written below is based on our choice of a “solid” trading strategy of trading (minimal risks to be taken). Further on, I’ll show you the consecutive steps which an auto-trading beginner should take on my own back. It will handle.
The first thing that I need to do before getting started with a trading robot is decided which kind of trader I am. Actually, I have already chosen – not interested in huge profits and risks, but smaller profits and smaller risks.
Therefore, I am choosing the trading strategy to accompany my trades. As I “fell in love” with a “solid” technique my system defined would not lose more than a certain number of pips in one trade.
As I am trading with an advanced Forex expert, surely I understand that it does the trading for me. I just do the adjustments according to my trading needs. The certain system that I choose also means the currency pairs for trading. So here I see one of the criteria for “loving” or “hating” a certain system – whether it offers needed pairs or not.
After doing all the above, I can actually get down to trading. Then my first step is choosing a system. The indicators of my “natural selection” would be basic parameters and applying a definite filter to the whole list of systems available. So I set:
- System’s drawdown maximum for one position
- Number of months since the system became profitable
- The number of trades, which can’t be less than thirty (a base for accurate info analysis).
These are basic filters that I use, but better results demand more complex filters. To make it clear for myself. I should now compare the results for previous and current filter. I just check the bullet point – the percentage of profitable positions. If a system brings me 32% of them and 68% are losses, I’d better change it for the better ones.
Ok, let’s carry on. Now I am going to see how many positions the system can open at the same time. For instance, mine carries four, which means four times of the exposure of a system which opens only one position.
Now I am ready to examine my systems one by one. Firstly, I will carefully study the system’s chart. Certain periods of time give me the certain chart direction. That makes utmost importance to me! If I am playing “solid” strategy I don’t need so the system’s chart displayed extreme movements. I need it going upward and in small proportions.
Now I am looking at the screen which presents the detailed information about every position opened with this current system. Like an FBI agent working with the suspects’ thorough database, I can see all the details about past and present transactions: activity time, the date of position’s opening/closure, and other useful stuff on this system trade.
Once I went through all the selection “jungles” (and choose a suitable system) I should remember two things. I chose a system after handling all of those steps above, so I will stick to it whatever my emotions tell me. Point two is telling me to set a period of time after which I will adjust the filters again.
The Forex market is like a woman’s mood – has a phenomenal ability to change. Basically, it means my system could not match the chosen criteria next week or month. Alternatively, it could not match this actual period, but become suitable in a month.
As some bachelors wash their socks once in a week or month (oh, dear God!), I would perform this filter with the same “bachelor” periodicity according to my own configuration.
Written by Collins Alexander, founder of ForexEASystems and a blogger. Company that provides automated Forex trading systems and semi-automated Forex strategy. By the way, every Forex trader can find there some Forex freebies as MT4 indicator FX Pulse, Fibonacci and Pivot Point calculators. You can grab these free Forex trading tools at Pipburner – Forex blog.