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Paid Forex Robots — Why I Avoid Them?

September 19, 2009 (Last updated on January 13, 2016) by

Why to avoid paid Forex robots or expert advisors? There are several reasons but most obvious one is quite simple — they don’t work as advertised. First, let’s get straight with the definitions — Forex robots are the same as the automated expert advisors, they are some trading strategies (sometimes advanced, sometimes not) embedded into a program code, which is most often intended for the MetaTrader 4 platform. There are many free expert advisors available on the popular Forex sites and forums and there are also many paid ones that are sold on-line. The price of such paid Forex robots may vary from as low as $20 for CaspianEA to as high as $499 for Dragonpips, while the average price seems to be near $100.

When it comes to the free expert advisors they are usually quite raw, require some optimization and tuning from time to time and work with minimal profit (even the best of them). As for the paid Forex software, it’s usually advertised as something complete — a ready-to-use product that will get updates for free from the author; it’s also advertised with an unbelievable level of profitability with more than 100% gain per month. So, what’s the problem with the paid Forex trading robots?

  1. The most obvious question that arises when you see a Forex robot advertisement that promises huge returns in small time is why doesn’t the author of this robot use it for his own Forex account? Really, why rely on some on-line sales at $100 per piece with all the troubles connected with setting up a site for selling, an affiliate program, user support, etc. If you can just turn on this “money-making machine”? And if you are using it for trading and earn huge amounts of money from it daily, why bother selling the software? Want to share your success? Just let the traders download it for free! When I find a good EA that’s, in my opinion, capable of being profitable I share it for free on EarnForex.com; other honest traders I know do the same. So, if you are using a robot and it’s profitable, you already earn enough not to worry about selling it, and if you are selling a robot as a money-maker and not using it yourself, then that looks like a hypocrisy.
  2. Verifying the profitability and the possible drawdowns of the paid expert advisors is very difficult, almost impossible. The advertisements display nice charts with the exponential curves of balance, suggesting a lot of potential profit from using the robot. But the problem is that all these test reports and statistics can be easily forged to showed any desired result. Some Forex robot-sellers use sites similar to MyFXBook to demonstrate the profitability of their EAs. And while this is really a good tool, it has some disadvantages, including soft demo account conditions with almost no requotes or serious slippage, fast quote changes, “market blackouts”, etc. At least many of the advertised Forex robots have some sort of money back guarantee declared, but I am not sure if these claims have something to do with the reality, anyway, it’s almost impossible to rightly estimate the usefulness of the EA in a 30-day period.
  3. The whole Forex software industry is getting quite ugly lately. Quite a few paid Forex robots are advertised aggressively via rather generous affiliate schemes, which results in tons of spam over the forums, YouTube, e-mail and other parts of the Internet. Of course, it’s not the creators of the software who spam the web, but the affiliate marketers (and probably not the best of them) but that’s still a problem for the whole Forex industry. The ads often contain semi-false claims, wishful thinking and even outright lies, which is very dangerous for all the potential Forex traders. New traders may fall for such ads easily, resulting in a future disappointment in the currency market. People that don’t know about Forex might think that it’s some kind of get-rich-quick scheme (which, of course, it’s not) or some other scam. So, in my opinion, the paid Forex robot market is currently set up in such a way that it hurts the reputation of the whole Forex trading industry greatly.

That’s what I think about the paid Forex robots. That’s why you don’t see any ads for them on EarnForex.com. Of course, I might be wrong in my judging and you are free to believe otherwise. But the above should be a warning to the newbie traders, while I am quite confident that the experienced Forex traders are already wise enough to see what’s good or bad for them.

Update: I have also added a related poll — Do you use Forex software? Feel free answer it if you are interested in the subject.

If you have any comments regarding paid Forex robots, please, feel free to reply using the form below.

7 Responses to “Paid Forex Robots — Why I Avoid Them?”

  1. Javier

    You forget the most important point: Heisenberg principle (abstracted).
    Even if you had a perfect prediction of the market, a simple reasoning shows that it would be cancelled out by itself as other market participants started using it, since the very edge is the information asymmetry between participants. As more people had these robots (and assuming they perform 100%), the number of loser participants would be scarce, reducing the benefit. In the limit, everybody making perfect decisions, there would be no market at all (everybody selling/buying at the same time).

    Reply

    Andrei Reply:

    Not all (even not the majority) of the Forex market participants are speculators that trade for the profit. The Forex market’s primary objective is the exchange of currencies.

    Reply

  2. Michael

    I use a few EAs/Robots that do earn me additional income. However, they do not earn the levels of return indicated in their advertising material unless you are prepared to take very high risks. Too dangerous for my liking! The key is to test the settings, and brokers, to get the best out of them, but grow your account little by little with good money management. I achieve 2% daily on average with robots.

    The other thing I have noticed on all the forums is that most users of the EAs are totally clueless about forex. Stupid questions such as “what is spread?”, “what is a pip?” tend to give this away. These people are just looking for a get rich quick scheme, and with no clue on money management seem to lose all their money in a couple of days.

    I seriously believe that only abput 1% of those who purchase robots do their homework and with a prudent approach can make money from them. EAs are axactly what they say. Advisors, thought the expert bit can be questionable in some cases! At the end of the day you still have to understand the markets and work at it and out in a lot of effort. There is no such thing as a free lunch.

    Reply

    Andrei Reply:

    Good point, Michael! Do you mind telling us what paid robots do use? Just names, please, no need to give the links :).

    Reply

  3. rick horsely

    I agree … good point Michael.

    Believe it or not I’ve found FAP Turbo to be working for me. Now this certainly needs clarification … it is certainly NOT doubling my money every month as claimed. It does however seem to average about 1-1.5% per day over the past 3 months. But not with the default settings. I’ve been using the settings from the fap turbo expert guide instead. The guide seems to quite genuine about risk and realism and how to manage it properly.

    I’ve tried most of the other “popular” ones but never managed to get them tweaked enough to show a good expectancy over time.

    rick

    Reply

  4. Phil

    I don’t quite agree with the first point-you have no idea if the sellers use the system themselves or not.

    As a businessman and entrepreneur myself I know that if I had a formula for anything I know that it has value. If something has value it can have a price put on it.

    Sure, I can make tens of thousands trading my system and I will do. But I can also make an extra few thousand selling that system to other people. That could pay my living costs leaving me free to use my trading profits for extravagances.

    I think anyone who doesn’t do that is missing out on additional income. And there’s the argument of ‘diversifying’ – relying purely on trading profits isn’t a good strategy. Supplementing that with any other venture is good sense.

    Reply

    Andrei Reply:

    That’s not only an additional income but a lot of additional problems and commercial risks to set up a sale of such software, while using the Forex robot to trade should be bringing unbelievable profits in short periods of time (or so the advertisements tell us). Those are non-comparable sources of income. That’s like to win a million dollar lottery and continue working in McDonalds to “pay my living costs”.

    Reply

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