In a post I published yesterday, I talked about the HiRider Forex robot which won second place at the recent Forex World Cup and made the case that it might very well be the best robot to come out of the competition, even though it won only second place (by achieving a return of 88.11%).
I thought this would be a good time to write a more general post about some of the qualities a good Forex robot might possess. I say might because there may be robots which some of these qualities and not all. However, the more of these qualities a robot has the better it may be to use:
1. It should be easy to install – After all, a robot is bought mainly because it is supposed to be a hassle free way to trade Forex. If it’s going to have you banging your head against the keyboard or spend hours trying to get it to run, there’s no point in getting it in the first place. A good robot package should include detailed installation instructions and the entire process should take mere minutes.
2. It should actually trade – Some robots may have a high accuracy rate but they trade so seldom that you can wait indefinitely for them to trade at all. What’s the use of being right 99 times out of 100 if it takes months to actually trade 100 times?
3. It should actually make money – This is the main thing and it goes without saying that a robot needs to make money. This is the major criterion by which robots are judged and was also the reason why the LMD-Multicurrency robot was awarded 1st place prize in the FRWC. Granted, profit is the goal of all trading. However, it is a basic rule of investment that profit or return needs to be evaluated according to the risk involved.
4. A robot needs to be safe. This brings me to my main point: a robot needs to be safe. You don’t want to win 30 trades in a row and then lose all your profit (or most of it) in one huge loss. What’s the point? You want the earning curve of a robot to be as smooth as possible (to indicate minimal losses when they do occur) and you want minimal drawdowns. In the recent FRWC, HiRider had a drawdown of 3.26% while the LMD Multicurrency had a 34.06% drawdown! This is why I think HiRider is the safer robot.
5. The robot should show results over time. Don’t just use a robot that has great results for a month. Try to judge it over time.
There’s nothing to fear from robots. Just make sure you’re using a good one and don’t feel down when you stumble upon a bad one. It happens to all of us. Just continue on to the next one.
