Forex Auto Trading Systems

There is no doubt that forex trading is a risky venture whether you trade by your own skills or use a Forex Robot. But there are ways to manage that risk, and the key method is by minimizing the amount being risked on any individual trade.

I have only been trading for a few months and the reality of just how quickly the market can move against a forex trader creating huge losses, was brought home to me again on Wednesday September 2 2009. On that day, both currency pairs traded by Robominer moved in a contrary direction within the same timeframe, creating the conditions for a massive drawdown on my trading account. The broker then started closing my positions one by one until my account had been reduced from $14,414.38 to $7,634.18. Almost $7000 was wiped off my account in one day.

And the frustrating thing is that this is only the second time within a month that this has happened. When a similar move happened on 31 July, I reduced the lot size I was trading from 1.0 to 0.5 to try and avert another disaster. I did however try to keep the account growing by increasing the lot size in proportion to the account balance.

I have now reduced that ratio to 0.2 lots per $10,000. The main reason I am trying to avoid reducing the lot size too drastically while I am paper trading is that I want to establish a reasonable middle-risk strategy – not overly aggressive, but not too conservative either. When I eventually start live trading this robot it will probably be on a $1k account, and that means that if for example I can establish that 0.2 is a good lot size to trade for $10k, I can start with 0.02 lots with the $1k account, or even start with $500 and trade the minimum 0.01 lots.

In this way I can establish whether this robot is going to be viable for the average everyday investor who may find it tough to find $10k or even $5k starting capital in the current economic environment. Plus, it is not wise to risk money you can’t afford to lose.  Nobody wants to take out a loan for thousands of dollars to trade forex, only to lose it and get stuck with the bill, and working harder than ever when their forex trading was supposed to make life easier by bringing in some easy money.

Add to that the cost of the robot itself (Forex Goldmine’s Robominer is a proven consistent trader but itself costs just under $500 for a lifetime licence) and you can see that the starting costs can add up.

However, I am still convinced that given the potential gains possible utilizing the huge leverage available within a forex account,  it IS possible to use a good forex EA like Robominer to make some serious money online. When I first installed Robominer in May it ran for 3 months without a loss, trading 0.02 lots on a $10k account, and increasing the account balance to about $13k. Only when I increased the lot size to 1.0, did it make its first losses.

So watch this space. I will see how Robominer fares over the next month or so, then decide on a good strategy for live trading.

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