Before we start most forex robots don't work because they are designed in hindsight and the vendor bends the rules to fit the data he is testing as no two portions of data ever replicate themselves exactly, the system fails.
This is known as "curve fitting", or bending the rules to fit the data.
One trader I know, likened this to shooting at barn door and then drawing a chalk circle around each and every shot, to make it look like a bulls-eye afterwards.
Here's the disclaimer you see on just about every robot sold:
"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".
Now people get put off automatic Forex trading systems and think they just don't work but they do and the one that we are going to outline has been used as the basis for forex trading strategies for some of the top traders in the world.
Before we outline it, be aware it cannot be "curve fitted" why? Because its only one rule and you cant curve fit that by definition!
The system was originally devised by legendary trader Richard Donchian to trade commodities and takes advantage of the 4 week cycle that prevails in most markets. Here is the rule:
It's simple - buy a 4 week calendar high and reverse and sell a 4 week low - that's it.
To simple to make money? Not as all...
Try it and you will see it makes money and is basically a long term breakout trend following system which will put you on the right side of every major move.
The only downside is when the market doesn't trend it can get chopped but you can cut drawdown by exiting on a shorter time frame ( try 1 and 2 weeks) and then re-entering on the 4 week rule.
This system has been used by trading legends such as Richard Dennis and if it's good enough for him well its good enough for you and me.
A word of warning this system works and will continue to work but it requires discipline - its long term and its not fussy about market timing and there is no manual input but stick with it over the longer term and you will be well rewarded and NEVER miss a big trend again.
Most traders won't use it though after all it's not as trendy as Fibonacci, a neural network or system based on chaos theory yet, it will beat 90% of other systems hands down.
If you are interested in making money from a forex robot and you want one that's stood the test of time then you should use the 4 Week Rule
All the best Forex trading systems are simple and you can't get much simpler than this one but don't assume because its simple it doesn't make money - it does. Try it for yourself and see.
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