Forex Auto Trading Systems

Why Aren’t More People Forex Auto Trading?

Over the last 5 ½ months since I started paper trading with Forex Goldmine’s Robominer, I have experimented with settings and have now, I believe arrived at an optimum setup for realistic returns from this forex robot, or expert advisor program as it is correctly called. Overall, the ROI (return on investment) at the date of this post, is about 13% for the period traded, which equates to about 30% per annum. This result in itself is worth the effort but in no way reflects the full potential of this robot. As an indication of what is possible, in the last 1 ½ months, since I settled on the optimum lot size to trade on Robominer, the ROI was nearly 50% which extrapolated works out at about 400% per annum. And that is without taking compounding into account. Given that this return equates to more than 1% per trading day, by incrementing the lot size and thus the eventual profit, each time the account balance increases, it is theoretically possible to make much more than 400% per annum.

As I mentioned in a previous post, $1000 compounded at 2% per trading day would turn into $20 million over 2 years. Of course, the compounding effect of trading with this robot is not as straighforward as making a simple mathematical calculation, like the banks do when they calculate interest. Because each trade can take up to a month or more to close in profit, there is a lag in the compounding effect which effectively means that the account balance will grow in leaps and bounds rather than consistent growth on a daily basis. Nevertheless, compounding does happen, and when you consider that only $1000 starting capital is required, even a return of say $1 million over 2 years is a staggering amount to make for that kind of investment.

Which brings me to the question which makes up the title of this post. Why aren’t more people forex auto trading? I suspect there are a few valid reasons, and some pyschological reasons which are perhaps not so valid. One valid reason is the risk involved. This is not a risk-free investment. It is however in my opinion a low enough risk to take given the rewards involved. Another reason might be the effort and time involved in setting up and monitoring the program. While it may not be as easy as putting the cash in a so-called “high interest” savings account, once the initial setup is done, there is not as much work involved as there is in trading forex, eminis or stocks manually. In fact, you don’t have to give up your day job or lose sleep sitting up late into the night watching the markets, waiting for a buy or sell signal, as many traders believe is necessary to make a living from the financial markets. I myself spend a few minutes a day before breakfast and after work, basically just checking to see if any trades have closed, and adjusting the lot size using a spreadsheet I have set up to calculate what it should be according to the current account balance. I also spend some time saving the current trading results once a week and posting them on this blog on the Trading Stats page.

Another reason may be that the average punter is not able or willing to invest $1000 which may represent 2 weeks pay for the average worker. This is a reasonable objection given the financial pressures which are brought to bear by the banking system on people who have outstanding debts such as credit cards, mortgages, car loans etc to pay off. There would be a big temptation to trade a smaller amount such as $50 or $100. This is NOT a good idea as the chances are, you WILL lose it due to the risk management profile of an account that size. Given that the minimum lot size on a micro forex trading account is 0.01 which equates to $100 of currency in the market, and given that Robominer opens multiple trades over a period of time, this means that if for example you had ten 0.01 trades open in a $100 account, a price fluctuation of 10% would wipe out your account. In fact, your broker will not let that happen and will start closing trades at a loss well before you get to that stage, essentially defeating the Robominer’s no-loss trading strategy.

PIPS Club

So what’s the answer? Well, short of suggesting that people go out and borrow $1000 on a credit card and take the plunge, there may be a way to invest a smaller amount such as $100, and still get a strong ROI. What I am planning to do, to help people who are interested in forex auto trading, is to start a profit-sharing club called PIPS Club (Private Investment Profit Share Club) where there is a guaranteed ROI over a period of months and the owner of the profit-share can then use the funds to start trading their own Robominer EA. What I am suggesting is a minimum profit share of $100 which will mature after 12 months at $500. That amount would cover the cost of a lifetime licence for Forex Goldmine’s Robominer. Another 2 profit shares would cover the cost of the initial trading deposit. Alternatively, if someone wanted to take the risk, they could conceivably just trade $500 and cover the ongoing cost ($39) of a monthly Robominer licence themselves. So for an outlay of $100, after 12 months the PIPS profit share owner would have a growing forex account starting at $500 and potentially growing at a rate of 1% per day.

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