Automated Forex Trading Systems | Do They Actually Work?

I have been around the block in regards to forex products and forex systems and as many of you are probably aware, I am no fan of Automated Forex Trading Systems, although some do work. Now before you get your panties in a bunch and ask the question "if they work, why don't I like them?", hear me out. Every Automated Forex Trading System that I have messed around with has made me money and lost me money as well. And for you newbies out there who are looking for a slam dunk in terms of making consistent profits, if you live by automated software, you will, in fact die by automated software. And worse still, you will have no idea why your automated trading system didn't work.

Here are the reasons why I don't think that Beginners of forex online trading should use an automated system:

• One of the supposed benefits to automated software for the forex market is that you don't have to know how to trade. The jargon in the sales letter used to promote these systems pander to the beginner. "You can set it and forget it and watch as the profits roll in daily". Well, anyone that has been in the forex market for even a few months can attest to the fact that given the volatility of the market itself, different situations make for different strategies.
• Because of the fact that you can "set it and forget it", many beginners to forex trading take way too many risks- A couple years ago, the japanese market dropped its interest rates causing the USD to drop rapidly. One of the "automated forex systems" that was working had many of its members suffer margin calls. Bear in mind that these people were probably not aware that with great risk comes great reward. And since up to that point, many were making a killing using this automated trade software, they started thinking that if they ramped up the leverage, they could make even more. One small move can change everything folks...everything. And when the news came out, there were many margin calls from people who had no idea what they were doing. Another one bites the dust!
• Automated Forex Trading Systems are geared for people who don't know a thing about Forex Trading- I have a serious beef with this. If you don't know how to ride a motorcycle, it probably isn't a good idea for your first drive to be on the autobahn. Same thing applies to trading. If you have never traded online, then it is probably good to acclimate yourself to trading first before you start to work on someone else's revolutionary system. Then again...it is your money...I guess if you don't mind not understanding how things work then you won't mind not knowing why a system failed you, right?
• If you use an Automated Forex Trading System and don't understand how the system works (what numbers are getting plugged in to establish entry and exit points, for example), then you will likely never know how to augment your system. If you are a beginner, then this should apply to you doubly.

I don't want anyone to think that I am poo-poohing automated systems for forex. On the contrary, I do occasionally use other people's systems from time to time. I am actually testing Forex Killer right now for some shorter term trades (I do mainly long term trades). Automated systems actually have a place for those who want to do trades without having the headache of sitting computer side all day long. And if you are a day trader or forex scalper, then a system may be what you are looking for.

Just be aware that an automated forex trading system is likely not going to make you fabolously rich. Just like anything else, it is a tool. And if you are going to use the tool, you should go underneath the hood of the system to see what indicators are being used in order to understand the methodology of why the system is trading the way it is trading. Anything less and you are simply cheating yourself of a potential wealth of knowledge behind the system.

Plus, if you understand how a particular system works, you can always augment it to suit your own personal trading personality...and that my friends, is money in the bank. An automated forex trading system can work for you if you know what you are doing in the first place.