What Is a Forex Trading Bot and How Does It Resemble a Cash Cow
This resource aims to introduce people to the world of automated Forex trading, and help the them get started.
It will also out line the dos and donts of this process, with the intention of helping new user avoid costly mistakes.
What is Automated Forex Trading?
So what is Automated Forex Trading?
Well, if you have ever traded before, whether it is stocks, CFD or Forex, then you will have likely have to learn and adopt a trading system. This system could be based on technical analysis on charts, then you have to sit there in front of your computer screen, every time you decided to make a trade.
Most people watch their screen for the best part of the day when day trading.
Now, imagine you hired an “expert” to trade for you. This expert will watch the charts for you and make the trade for you base on her extensive trading experience. And she will report back to you at the end of each day of her results, and how much money she has made (or lose) for you, while you sit at the beach sipping coconut juice on the Gold Coast in Australia.
This “Expert” is a computer program, in which we call “Expert Adviser”, or trading “Bot”, and this bot is used exclusively (in most cases) to trade on the Forex Market.
So in a nut shell:
Automated Forex Trading is the act of using a computer program to buy and sell currency pairs on the forex market.
The platform in which this “Expert Adviser” operates is MetaTrader, and most Forex Brokers will support the Meta Trading Platform.
The good and the bad of Automated Forex Trading
So if Automated Forex Trading is about getting a robot to make you money on the market while you sleep, what’s the catch?
The Bad
Well the catch is the not all Expert Advisers on the market today are profitable over Botlist long run, and even the ‘good’ ones need to be properly managed and configured to ensure it’s running smoothly so it doesn’t “over bet” itself as your capital increase over time.
So for the newbie who just got his hot hands on a new “kick ass” bot can potentially lose money due to the lack of testing, poor configuration and the lack of proper money management.
The Good
But the good news is that, if you take your time to property test your bot, give it proper settings and calibrate it monthly, and have a conservative money management strategy, then you will benefit from trading bots greatly over the long run.
If done correctly with trading bots, then you can have PASSIVE income.
Passive income in my option, is the “Holy Grail” of becoming rich. It means, you earn money while you sleep.
Getting 5-10% (or more) on your money every month is very achievable, which compounds to about 79% to 313% per year. This is a great return, compared to your average term deposit in Australia at the time of writing is only 6% per year.
So say we are conservative, and use 79% return on investment per year, if you invest $5000, in 3 years time, you get $28,676!
And all this time, you did nothing, other than check your bots every month.
What do i need to get started?
Now that you know the potential of Forex bots to become your “Cash Cow”, how to we get started?
Well, you will need 3 steps:
1) Sign up with a broker
There are many brokers out there, for a list of recommended brokers, please see below.
Please note that brokers WILL affect your performance, some brokers have smaller spreads than others, some brokers can even rip you off, and create artificial spikes to push your bot into triggering its stop losses, so make sure you do your research.
Make sure you create a demo account with that broker first.
Once you downloaded your broker’s version of Metatrader 4, just install it by following the instruction.
Once installed, open the application and have a play with the interface.
2) Get a Bot
There are many bots on the net that you can download, some are free and some you have to purchase. I have a recommended list of bots that i use, please see below for more info.
And before choosing your bot, make sure you read about it.
Once you get your bot, it is then a matter of copying the source file of the bot into your MT4. Most bots will guide you through the installation, so this step is straight forward.
3) Test the bot
No matter how good the bot claims to be, you will need to do some backwards and forward testing on it before you can give it real money to play with.
In MetaTrader 4, there is a function call “Strategy Tester”. You can use this to feed historical data into the bot of your choice, and see how it performs. This is called “backward testing”.
Even more important is to do “forward testing” which is using your demo account and run the bot with live data.
Knowing how to test and configurate your bot correctly is an integral part of your success, so skipping this step can be very bad for your bank account.
Final Thoughts
There you have it, I hope this short article has given you some insight in this exciting industry, however, we have barely scratched the surface.
To learn more, please subscribe to my newsletter, by subscribing you get:
1) Bonus material about the best FREE bot that you can get right now, along with back tested results to show how much money this Bot can earn for you. And yes i do use this bot myself.
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