Trading and making consistent money in the currency market, to many beginning and intermediate traders, has always been an extremely difficult task. For those that are just starting out, making money is usually the only thing on their minds. This is as a result of starting capital of many of these traders. With very small money in their accounts, usually below $2000, high level of risk exposure with that small account make them most vulnerable to premature exit from the foreign exchange market. A solution which many of them usually opt for and which in many cases is responsible for their losses is the arbitrary adoption of automated trading system.
While this might be a viable boost to their profitability drive, some crucial issues with trading software, which these traders often overlook, albeit naively is the issue of risk/reward ratio of some of these robots. While it may be said that the risk/reward profile of many of these products are grossly unacceptable, the attention which traders give to details about products they purchase is even more unacceptable.
As an example, some of these software products come with risk/reward ratio of 2:1, while some even have risk/reward ratio of as high as 35:1. My experience using these products revealed that many of these systems do not even have stop losses at all. This is definitely a ploy by the authors of these products to feign profitability.
Get this right, there are great forex expert advisors and trading gizmos that can make you good money, but how do you recognize such? The features to look out for, is what this article tries to address. It is pertinent, for traders to avoid such products like an intractable plague. Any automated trading system that does not define definite stop loss or those that come with more than 1:1 risk/reward ratio should never be considered for purchase. The risk/reward ratios in any trading strategy simply mean that, in the case of 35:1 risk/reward, for every pip you make in a single trade you risk loosing 37 pips.
Think about it. With software employing such strategy, you hardly need a soothsayer to tell you it won’t take long for you to blow up your trading account. It has been conclusively proven that automated products which adopt strict and professionally acceptable risk/reward ratio of less than 1:1 run far lower risk of destroying your trading account than such systems adopting more dangerous risk/reward ratio, which will do nothing but destroy your account before you finish spelling forex.
It is better to use automated trading systems that protect your account and grow it at the same time. Give your forex trading account the same treat you will give your personal life account. After all, it is your money, treat it like it is yours. For more on professionally packaged automated systems that work, you may want to visit this site http://www.pipyard.com |
