Forex Robots: The Good, The Bad and The Ugly! Part 1

As forex continues to explode I asked a good friend, Dr. Jeff Wilde from, to bring us his expert opinions. As the title states he'll be bringing the good, the bad, and the ugly! He's also asked for personal stories (of good, bad, or ugly) to be left in the comments!


Unless you haven't turned your computer on over the past 12 months you can't help but notice that practically every week another forex robot comes on the market.  My inbox is getting bombarded with offers lately all promising me a life of riches with little or no losses by using these forex robots.  Anyway...  I am blowing the lid off of the robots and taking an in depth look at them.   I have a lot to say about that and will get to it in a moment.

I pretty sure most everyone reading this knows what a forex robot is but for you newbies let me explain briefly...

A forex robot is a computer run program that is designed to analysis the forex markets for trade setups based on a particular trading system.  Whats more they can easily analyze multiple currency pairs at the same time.  In addition they will automatically place the trades for you without you even having to be present.  The most popular forex software to use forex robots with is Meta Trader.

The GOOD things about robots are...

1.  Save a lot of time
2. Prevent you from having to do  a lot of manual analysis on your charts
3.  Eliminates user error
4.  They can even place the trades for you automatically.
5.  They can easily trade multiple markets in real time.  This is something very hard for a great many traders.
6.  Allows you to be doing something else while it trades for you.
7.  Allows traders with minimal experience to start trading very quickly.
8.  Helps remove user emotions and indecision

Now for the BAD...

For starters...

1.  What happens if your computer crashes while the robot has you in a trade?  Unless it is able to put all its commands onto your forex brokers server, you could be screwed.

2.  You need to realize that a forex robot is not magic.  It is simply a set of trading rules designed by a human being.  And, the system is only as good as the person that created it.

3.  There is a lot of "smoke and mirrors" in the wold forex robots.  What I am talking about is the use of a  thing called optimization.  This is a feature that allows you to go back in time and analyze all the trades your system would have taken and then what it does is ... It will change the parameters of the system to improve the results.  For example say your system uses a 8 period and 21 period moving average crossover as one of the triggers for  a trade.  Well when the software goes through the optimization process and it will examine hundreds of moving average combination's and determine which would have provided the best performance.  Lets dig a bit deeper...

A little optimization is ok as it may help you discover a better combination of indicators then you could have come up with on your own, but...

The big problem is when the robot creator gets carried away with the optimization process,  because they can literally keep tweaking things until they show little or no losses on the test  results.
The trouble with this is that the robot creator is doing a thing called "curve fitting" the results.  This gives a false sense of security and can be very misleading as a  curve fitted robot will ALWAYS eventually fall apart in the real world.  This is one of the reasons you see some of the forex robots boasting extraordinary profits fall apart within days or weeks of using them.

Now for the UGLY...

1.  A lot of the new forex robot systems are claiming no losses.  Now I have to say this as clearly as possible, that is BULL S*&#!  Yes they may show no losses but there are some dangerous things going on.  The systems that say no losses don't use stop losses.  Their reasoning is that eventually the trade will close out profitably.  Well maybe many of the trades will, but what happens if just one doesn't?

I was evaluating a robot the other day that claimed 100% wins.  Well guess what?  It was sitting on a GBP/USD trade that had an open loss of over 500 pips. Sure its not a loser until you sell it, but who wants to see a trade down that many pips?  To give this a different view, look at investors who bought a stock for say $200 a share back in 2000 and now it is trading at $2.  Technically they don't have a real loss until they sell it, but the bottom-line is their account is down huge.  And it could take 20 years for the stock to come back to break-even, if it does at all.

So back to forex... What happens if something happens on the GBP/USD that forever devalues it?  It means that the 500 pip loss could keep growing and never comeback to break even.  What then?  That one trade could wipe out your account.

2.  Other forex robot systems claim very high win rates of over 90%.  That is great until you dig deeper and read the actual trade reports.  What you will see is something like this... Nine trades will make small profits like 5 pips - 10 pips and then all of a sudden it gets a big loser of 50 to 100 pips.  In one trade all the previous gains are wiped out and you have to start again.

3.  Another form of robots have truly impressive gains when you look at their back tested results.  You will see that they made say 457% over  the past year.  The trouble is when you look at a thing called the equity drawdown, the account could have dipped down in value as much as 75%.  Now I don't know about you, but most traders can's stomach that kind of draw down.

Let me wrap this article by giving you a real world, real money example of a robot. Two years ago a friend of mine had developed a robot to trade the emini futures markets.  Over the past 6 years it had averaged 92% winning trades and never had more than one losing trade in a row.  It also produced huge returns each year.  My friend had traded it for a year and it performed with real money exactly as it had done over the past 6 years. So far so good...

I told him I wanted to open an account and I started with $15,000.  In just 3 weeks the account was up to $35,000 and at that rate I was sure I was going to be a millionaire within a year!  Well out of nowhere it had 2 losses in a row and they were big.  In the blink of the eye the account had dropped to $20,000.  I was blown away at how it could fall apart and have 2 losses when they hadn't occurred in over 700 trades in the past 6 years.  At this point,  my friend said something wasn't right and that we should be really careful from here on in.  Fortunately I pulled the plug on the system and closed the account because the system had a 3rd loss in a row the next day.  According to all back tests this was mathematically impossible, but that didn't stop it from happening.

In hindsight we have no idea why the system fell apart, but what I do know is that its fatal flaw was that the losing trades were 8X-10X bigger than the winning trades.  That's how it got the 92% winners.  It may be obvious to you that the risk to reward values were really bad, but...

This is generally how forex robots can claim few losing trades.  The reality in trading is that it is almost impossible to create a trading system that has a 90% plus win rate with A small risk and huge reward ratio.  If it does exist, no one will sell it to you for $97 because it it could easily be sold to a financial firm for tens of millions of dollars.

Anyway...  I have a lot  more to say on forex robots.  This is just to get you thinking and to open your eyes because there are some really crazy claims being made out there.  I'm not anti-forex robots. but there is a whole lot to know and learn in order to make them work in your favor.

Dr. Jeff

To read Part 2 please visit

13 thoughts on “Forex Robots: The Good, The Bad and The Ugly! Part 1

  1. I have been running it (Fapturbo) live since Dec 08 and am down about $120 in a $1000 account at FXCM.
    It took me 2 losses of about $140 each to figure out that I should not use the long term strategy. The losses are to big for a small account. The forums now say the same thing.
    The Scalper strategy seems to come up with some winners though. Mostly in the us/cad and eur/chf. The gbp/usd has a few trades but not many winners.
    Some of the problem of no money to be made is with the spreads. FXCM and FXDD (I had accounts at both) promise great spreads but once you set up and install FapT the spreads magically change whenever it tries to trade. Just .00001 on a 3 point spread will keep you out and stop them from losing on your winning trade. They say that they are not making the market but if you read carefully they have the option of doing it at any time. I suspect that the through to dealer accounts don't go through very often, it makes sense because they (dealers/banks) don't deal in small .01 lots.
    This is my $.25 worth anyway

  2. I purchased Fapturbo in december, 08 downloaded it successfully even though I a poor Community based internet service (the only high speed internet service availlable here). I then purcased the forex hoster MetaTrader and supposedly downloaded it successfully, but I was one of the first few to purchase Fapturbo and there was a glitch that prevented me from installing the new monthly updates properlly even after tying to get though to support staff many times with no success which as it turn out is a very good thing.

  3. I used Fapturbo for several weeks. I monitored the trades in order to avoid the occasional large loss. This worked great for about two weeks. My account was up about 20%. I could be wrong but I think the developers of the robot killed their golden goose by selling too many. The scalper version of Fapturbo is designed to trade four pairs at times of low volume. 21:00 to 1:00 GMT. It really only worked well on the EUR/GBP and EUR/CHF. With thousands of these robots trading the same two pair during the same hours of low volume and limited to a small number of brokers, I think price movement in the market was affected.

    When I first started monitoring the trades, there was a lot of price movement in a 10 to 20 pip range and I would get from 4 to 8 trades during a 4 hour session. About 90% profitable. I got a good feel for the way the market moved. As more and more of the robots were sold, the market appeared to change. There was very little price movement and therefore very few trades. The trades that did occur stayed open for a long time and in order to avoid the occasional large loss it became necessary to monitor the trades far past the 4 hour session or either close the open trades manually at a loss. I think it was a really good robot but greed killed it.

    I would be interested to hear some comments on my theory of why it quit working like it did in the beginning.

  4. I am a newbiw in the forex world. I spotted quite a few forex Robots in the market and kind of thinking abut their claims though never really bought one. But this article can be a good eye opener for the people who are thinking of buying such software.

    But I liked the "Bird Dog"strategy John from Hong kong uses it. It's really cool.. It just collects all the information and presents in front of you to decide on the trades. It's a semi-automation process. Can any one know such softwares available on the market ?

    By the way thank you very much Jeff for this enlightening article..

  5. my forexautopilot (Marcus Leary creator)was amazing for a while, turnig my practice account from 3,000 to 7,000 in about 3 weeks. I quickly started a live account with 7,000 and in 5 weeks it zoomed to 18,500 and I was thinking retirement was just around the corner. Then came the losses and they were huge, trading with no stop loss was silly and risking your entire account for each 20 pip target is crazy. They claim no one has lost their margin account which is probable true, when my account was down to 139 it closed my position. I am going back to trading stocks. Brent....Roy,Utah

  6. i have tons of adver in my mail box about new robots,
    but i never bought one. who will sell a winning system creating thousands of dollar for hundreds of dollars!!

  7. Hi world outside my trading room 🙂
    I have bought some trading robots (FAP turbo, Fantasy Forex, Advanced Fantasy Forex, Forex Master) and I let them trade on a Virtual Private Server (VPS) that runs 24/7 without my computer at home needed to be turned on and let them them trade a small account of 3,500 USD gambling-money. They trade since about 3 months and there are still 3,150 bucks left from my initial deposit and as I review the trades each day, I would call it a good performance 😉
    I have 4 trading robots, each of them promises me to become millionaire maybe not over night, but within months...after three months or so now I am down 10%. So much about the incredible results of these money making software.
    I tried to let them work in combination, so that each day up to 60 trades have been executed, or let trade only one system at a time. Always with a risk factor of 1-3%. But that also can lead to loosing trades you loose up to 10% on your capital with a trade, because the risk reduce factor is in regard to the margin.
    So, lots of very, very, very small profits again and again and again are wiped out by the next big loss.
    I will keep on let the robots trade and I will keep on playing with combinations of robots and risk reducers as long as there is still money in the account, because there might be a happy constellation occuring in the markets and by chance the robots will make profits. So right at the beginning of this experiment, the account size went up to 5,700 within days before the next loosing trades brought it back to earth. But maybe there might be combinations of time frames, risk reduce factors, currency pairs and systems that might work and bring constant and small to average profits without the big losses that eliminate the account within days. And if I would find this combination, it could be great fun because the robots really do their job without me sitting in front of the the monitor and let me take use of my time elsewhere.

    But as it´s beenj said...I would recommend you NOT to buy any of those systems - still the holy grail of trading that makes you a millionaire over night without risking billions has not be found and neither are the tradings robots one. The only one that becomes rich with them are the people who sell them and the brokers.
    But it´s nice little toys when you let them play only with money you don´t need 🙂

  8. These types of programs are always for the inexperienced,gullible fools of society.

    If the programs were that good the owners would be using them to make a fortune for themselves trading their own accounts - not flogging them to the gullible.

    A fool and his money are soon parted and there is one born every minute. Thus, there is always a market for these products.

  9. I have used a robot to "bird dog" trades for me. What I mean by that is that it scans about 10 pairs looking for a good trade all the time (this is something that is physically impossible for me to do). The robot doesn't trade very much but when I get filled I look at the chart and evaluate for myself whether it is a good trade or not and often change the stop loss and the profit target the robot has set on the trade. So far it is working quite well. I feel this is using this new robot technology to my advantage but minimizing the risk. I think that to simply "autotrade" a robot 100% is asking for trouble, but I've never actually done that so can't be completely sure of that statement.

    This method has yielded about 60% wins 40% losses. With the wins in the 100 to 300 pip range and the losses of 30-40pip range. The robot is designed to look for the larger trends and is not a scalping type of robot which fits my style of trading.

    All the best...Hong Kong John

  10. If you give a man a fish, you feed him for a day; if you teach a man to fish, you feed him for life.

    If you sell a man a robot you provide him with the temporary illusion of having obtained that which can never be: a free lunch.

    But if he thinks about the word "robot" he might get interested in anagrams, realize an anagram of "robot" is "to rob" and go back to learning the skill set needed to be a trader while helping to eliminate the market for the robbers who peddle robots.

  11. Maybe Your Robot with Martingale, Pyramiding ,and Averaging Strategy that strategy will give you amount small Gain, and Huge Losses at the End.
    You can looking for anotherone with Suitable with your Trading Strategy, yours.

  12. Hi,

    Thanks Dr. Jeff for your valuable information.

    I had asked my self the same question which you have mentioned in your article. "If it does exist, no one will sell it to you for $97 because it it could easily be sold to a financial firm for tens of millions of dollars".

    I used my common sense and I decided NOT to touch the FOREX ROBOTS.

    Best regards,

  13. Hi,
    I have purchased and tried out 5 auto robotic EA's and got my money back on all of them. I will not touch any more.
    The classic example was the FAPturbo - what a laugh !
    The website sales waffle advised that during NINE years of testing there had not been one losing trade. The day after it was released to the public for purchase it encountered its first large loss on the very first trade. Fortunately for me I was still setting up the software when the authors emailed every purchaser with all sorts of excuses and reasons for the very first losing trade.
    I would rather wake up in the morning and see my money still intact !

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