Alright, so some of you may have noticed that for the past few weeks I have been promoting Forex Killer in my side bar. For those of you who don't know what this product was, it was basically an automated forex trading software that dealt with grabbing profits on a very short time frame. Now, most beginner traders who want to learn to trade forex online would like to believe that there is some magic bullet. In other words, they don't want to do the work and make as much profits as possible. As the saying goes though, if it is too good to be true, it typically is. And if you are a newbie trader, I would suggest that you get a demo account and play around with different strategies as well as get busy learning basic trading fundamentals.
The Reason Why I am no longer promoting Forex Killer
I hardly ever use automated software mainly because I am a complete control freak and prefer to make decisions based on my own accord, not by some robot that automatically makes trades for me. However, I know that many people are looking for that one program that will reduce the amount of time they spend behind the computer watching trades. Therefore, I dropped the money on this product and gave it a month to see if it actually performed how it claimed.
I started a demo account to play around with it and I have to say that frankly, the end result was a bit disappointing. Not only did I not make a profit but yesterday I wiped out my entire account. Now, if I had taken this software at face value and actually tested it with real money, I would have been pissed. However, using a forex demo account, I was able to determine that it really didn't do what it claimed and was only out of $100.
Just to give you a litmus, my personal trades netted profit for the month (I do my trades according to long term trends). Forex Killer underperformed and I think that I know the reason why....
The software is based around the 1 minute timeframe and as I have been preaching all along, the shorter the time frame, the more exposed you are to things such as the random walk. In other words, you are basically better off heading to Vegas and betting on red or black on roulette. If you believe in the random walk theory, then you would understand that there is no way of actually knowing how a trade will go.
Another HUGE problem that the forex killer software had was the fact that they didn't incorporate stop/loss pivot points in their trades. Frankly speaking, this is extremely dangerous for anyone, even the most experienced trader and especially true when you are dealing with short time frames.
So, those of you who are using Forex Killer may be getting different results, but I have to admit that I was less than impressed.
Is there any Automated Forex Trading Software that actually works?
I have already mentioned this and posed this question but I feel like it is definitely worth revisiting. Most who are even somewhat experienced with what to expect in the forex market know that most claims of automated trading software is bunk. Most of the automated forex software out there are nothing more than scams that rely more on the flip of a coin than any form of technical analysis.
And this is true almost all the way across the board. It makes sense when you really put it together. If someone developed and packaged a system that actually worked and it was used by thousands of traders, it would almost immediately cease to work. Why? Because in forex trading, it is trader versus trader and the trades that actually move the market bearish or bullish. And that said, if there were a thousand traders all "selling" according to the software they were using, the market would be in a state of flux.
Of course, a thousand or so traders doing the same thing because some automated software told them to do it probably wouldn't move the market in and of itself given the fact that there is so much money traded minute to minute but you get the point.
Another thing to consider is you should ask yourself....if you were able to make profits off of some system that you developed, why would you sell it to the masses? I know, I know...many of these guys make crazy claims like they are trying to help people and what not but trust me, when it comes to money, there is always an inside slant.
Automated Trading Software really targets the new traders who have no idea what they are getting into and although I would love to find something that works, I probably won't. We all want our lives to be easier but when it comes to relying on a robot to perform well enough with your money to make you more money, I probably wouldn't suggest it.
Still though, I do like to back test new automated platforms as this gives me the opportunity to see what formulas they are using to produce the numbers they claim to make. Bottom line is that if you are using this type of software, you should back test it for months to determine whether it is something worth risking your own bankroll. I said months...not a month...not 2 months...but at least 6 months (obviously if you lose your demo account in a month using their algorithms, then you know you have a loser.
How to make money trading forex
First off, I want to emphasize that forex trading or any trading for that matter is a journey without a destination. You will always be learning new things and making mistakes along the way. There are few shortcuts you can take.
That said, you can significantly improve your chances of making profitable trades if:
- You understand the fundamentals and jargon of trading. This includes technical analysis for your forex trades. I emphasize the Dow Theory as this is the backbone of my trades in terms of analysis.
- You understand how to follow trends and you follow them- I usually make follow monthly trends and yearly trends. I rarely go any shorter as the shorter you get, the more exposed to the random walk you are.
- You understand that you must have stop/loss points and are religous in following them- If you aren't using them, you can pretty much kiss your profits buh-bye over time.
- You understand support/resistance lines and know how to identify them.
- You understand leverage and don't go over your head with leverage in your forex trades.
