Are Expert Advisors profitable at the long term?

Forex Robots or EA

Probably the most common questions among traders that are getting started with the Expert Advisors are the following:

  1. Are trading robots profitable at long term?
  2. Can we make a living with this?
Both questions, obviously have the same answer and the answer is a resounding yes. But a resounding yes with many shades.
Forex robots work better or worse depending on what we can call an appropriate market. In this case, we can define an “appropriate market” by a number of factors:
  • Volatility
  • Correlation per session
  • Correlation among currency pairs.
  • Fear-greed of the moment (based on market fundamentals)
  • Liquidity.
Obviously the basis of these aspects is fundamental factors that are represented in our charts.

Therefore, an automated system will be profitable as long as it engages, or is geared perfectly for a specific appropriate market. To give an example, the market in September 2010, to date, it has nothing to do with the market we live in May 2010, the appropriate market in this particular case, obviously, if not opposite, at least is very different A system of high volatility that works with trends, would have failed miserably if it had been activated in the first 15 days of September, in the main currency pairs. But the same hunting-trends system activated in May 2010 with very well defined targets, would have produced profits rather interesting for those dates.

Therefore, we need to understand each system separately, and completely independent of another system. We can never make the mistake of comparing apples and oranges.

Therefore, the coupling between the current market conditions and the trading system specially designed for these conditions is essential if we want long term success using automated trading systems. Also, we can talk about another fundamental variable: the understanding of the market and the trading system chosen by the trader. If the investor knows in depth both the market and the automated system itself is much more likely to be profitable in the long term, hence the importance of experience and training of the trader.

A trader interested in automated trading systems must not only know about Expert Advisors but, ideally should be a good manual trader.

So, yes we can be consistently profitable with Expert Advisors, but we must know first the difference between market characteristics and in-depth knowledge systems.




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