How to find a good forex robot? There are many trader who want to trade with a forex robot also known as an Expert Advisor or an EA. What a forex robot does is automate a forex strategy. There are many good mechanical systems that can be easily programmed into an EA. When a forex strategy is programmed into an EA, the EA monitors the market and opens and closes the trade according to the conditions programmed into it. This way the trader does not need to monitor the market. The EA unlike a human does not tire and can monitor the market 24/5 round the clock.
The most important thing that you need to keep in your mind is that a forex robot is as good as the forex strategy that it uses to trade the market. If the core strategy is not good, don’t expect the robot to work. Rather if the strategy is bad, the robot can easily burn your account. So the first thing that you need to check the core strategy behind the robot. You must know whether it is a scalper robot or a trend trading robot. Does it use a wide stop loss? There are many scalper robots that don’t use a stop loss or use a wide stop loss. Avoid trading with such robots!
Before you purchase a forex robot make sure that it has got 60 days of no questions asked money back guarantee. If there is no money back guarantee take it as a signal that the developer is not confident about his robot and most probably it is a crappy piece of a software. Once you are sure about the money back guarantee, you can download the robot and test it RISK FREE for two months to see whether it is worth trading live with.
After the download, first thing that you need to do is perform a backtest. Most backtest that are shown have a modelling quality of 90%. Learn how to do a backtest with a modelling quality of 99%. A backtest with a modelling quality of 99% reveals a lot more than a backtest with a modelling quality of 90%. Change the different parameter settings to discover the best ones that give the max return with lowest risk. Make sure that the drawdown is less than 8%. A max drawdown of more than 8% is not considered to be good. But keep this is mind that a backtest is no guarantee that the robot is going to work as a backtest is done using historical market data. The markets keep on changing and what worked in the past may not work in the present.
However, a backtest is always considered to be a good starting point. After the backtest, do a forward test on the demo account for a period of at least one month. Testing a forex robot does take time. But it is worth it. Never risk trading live with an EA until and unless you have thoroughly tested it. Once you are done with the forward test, check what was the return and what was the max drawdown. This is very important. As said before, a max drawdown of like 16% is not good. Change the settings so that the max drawdown return below 8%.
Once you are satisfied with the forward test, open a live account with a deposit of $300 and trade live with that robot for another one month and see how well it performs. Once you have thoroughly tested a forex robot and you become totally familiar with how it behaves while trading live only then think about increasing the deposit size to something like $2K to $5K. It is only through thorough testing you can find out if a forex robot is good or not!