There are 4 main criteria we tested to make sure a Forex robot is a good robot:
Backtested
Most vendors will sell you their Forex robot based on successful backtesting. Backtesting is important as it shows us that the robot can potentially profit from live trading. However, you shouldn’t just focus on the backtested results and it does not guarantee successful forward trading.
Why? Because the backtester can ignore market conditions. In live trading, you might see a gap in price during a news announcement and market spikes. You may also see the big spread between the bid and ask prices of the currency pairs which may affect your trade due to excess slippage.
Forward Live Trading
The absolute best proof is live trading. Not many robot vendors use live trading to support their claim that their robot is the real thing. By looking at the live trading account, you can see how accurate is the backtested report of that robot.
Money Management
No matter how well a Forex robot seems to be live trading on internet marketing or back testing, we can never know what the future result will be. Hence, we must employ adequate safeguards and sound money management rules. This is the KEY to successful LONG TERM wealth building via Forex trading.
Low Drawdown
Drawdown represents the total percentage loss experienced by a strategy before it starts winning again… and drives the investment balance back up. Taking draw down into consideration, you can judge just how risky these automated strategies are. You will see some out there that have a 40% or even higher draw down in their reports. With those kinds of odds, you better have one heck of a strategy to back up that high of a risk level.
A good robot should be below 15% draw down, which means you have an expert advisor backed by a rock-solid strategy that would take an absolute miracle to bankrupt an account. These are the 4 important criteria we focus on and you should too when making your decision for the Forex robot. Besides, a reliable internet connection is another important factor you should take note of for the robot to work properly. If you are having many trades, you may want to consider hosting your robot on Virtual Dedicated Server. This means that the robot is trading from a hosted service instead of your computer.
