How To Deal With Badly Behaved Forex Robots

Every once in a while I get an email or a frantic call from a trader that is just fed up with their Forex trading robot. This is normal and it can be very frustrating to deal with, but there are a few simple steps that you can follow to avoid having to deal with this kind of stress when trading with Forex robots.

Now, don’t get me wrong, I’m not saying that all EAs are perfect because as we all know, they do have their flaws. But, you will find that in nearly all cases, it is a matter of the trader having unrealistic expectations or being unprepared to deal with the results that present themselves and not knowing how to fix it or cope with it. Let’s break it down a little further…

The Most Common Problems

Usually, it boils down to the EA making too little profit, or losing too much. For the EA that makes too little profit it can be time consuming and painful to watch. As traders we want to see huge gains taking our account balances higher all the time but when we see small little tidbits, it can be discouraging and it can start to get frustrating.

On the other hand, if an EA has a few losses, as traders we tend to panic and start fearing the worst. This is normal and it happens to everyone. I have seen many traders throw away perfectly good robots after one or two losses then run back to them again after they see the profits from a string of wins that their trading buddies made with the same robot just a week or two later.

Both these problem can be easily avoided if we just know what to expect when we start trading with robots.

Knowing What To Expect

Whether you trade with an EA or manually, you are going to have losses. It is not something that you can avoid no matter how hard you try, it is a given. Knowing this simple fact will help you deal with your results in a better way. When you know that your robot is going to suffer some losses, you can be better prepared to deal with it, accept it and move on.

One of the most important things that you need to know is what kind of drawdown to expect. You also need to determine your own drawdown tolerance level. If you are trading with an EA that has shown a 20% drawdown level during testing, you will know that you can expect to see similar results during live trading. Armed with this information, you can alleviate a lot of stress when your robot goes through a bad spell. If your robot has a bad run and has a drawdown of about 5% it is still too early to pull the plug but, if the same EA starts to get close to the 17% drawdown level, it may be time to consider removing it from your portfolio.

Now, 20% drawdown may seem too high for you and that’s fine. You need to determine an acceptable drawdown level that you are comfortable with. I personally prefer to drop an EA when it reaches the 30% drawdown level but it may be different for you.

The point is that you need to know where to draw the line. This information will prevent you from getting frustrated when an EA is just going through the motions. If you know that your EA is within your acceptable drawdown limits, give it a chance to prove itself. In most cases, they usually come good after some time.

Deal With Your Emotions

I have a saying at my office, “Check your emotions at the door”. I do not sit down to trade if I am not feeling up to it and I do not get too carried away with the result of a trade, whether it is a win or a loss. This can be dangerous because if you attach too much emotions to your trading, it will lead you to make decisions based on emotions. Avoid this at all costs or you will get in trouble.

You need to be able to treat a win or a loss with the same set of emotions. Don’t allow yourself to get too excited when you win because you will find that you may be devastated if you lose.

Don’t get angry at your robots! They are just pieces of programming code that do not mind what your emotional state is.

Stick To The Plan

Remember your drawdown limits. The reason you set an acceptable drawdown level is to prevent yourself from making hasty decisions in the heat of the moment. When you know what the cut off level is for your EA, you will not need to make any decisions until the barrier is breached. Until that time, just chill and let it play out. Don’t try to change the plan as you go along.

It helps to write out your plan and your rules for trading and keep them close to you when you trade. They will serve as a constant reminder and help keep you out of trouble.

Keep Your Feet On The Ground

This one is important. You’re not a bad person if you have a bad run of trades. You’re also not the greatest trader in the world if you make a ton of cash in the markets. Be centered and keep your feet planted firmly on the ground. It makes for a much more enjoyable trading experience in the long run. The more you learn to seperate your emotions from your trading, the better you will perform.

Try it for yourself and let me know how it works out for you. 🙂


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