Why Do So Many Forex Robots Eventually End Up Losing Money?

Forex robots have taken off in a big way in recent years. These automated expert advisors are usually configured to work with a platform called MetaTrader4 and are able to automatically trade the currency markets on your behalf. They are programmed to enter trades based on specific market criteria however the trouble is that most of them ultimately fail. So why is this?

Well I think the major problem is that they don't use proper money management principles. If you want to make some decent money from forex trading, you need to grow your capital slowly over time. Forget about using leverage to target those really big gains. This will usually end in disaster.

What you need to do is to target steady gains whilst protecting your capital from any losses you may incur. Unfortunately when you use one of these forex robots, this is often out of your hands. The stop loss is often set by the expert advisor and it's often not recommended you change this stop loss yourself.

Worst of all you will generally find that many of these expert advisors use extremely large stop losses of say 400 or 500 points, for instance. So if one of these stop losses is triggered soon after you start using the robot in question, this could well be enough to wipe you out, and if it doesn't it will certainly make a huge dent in your trading capital.

Not only that but the profit targets per trade are often in the region of 20-50 points. So what they are basically doing is holding onto a trade long enough for it to move into profit, and by using such large stop losses they are giving themselves every chance of achieving these profit targets.

So this should act as a major warning sign if you notice that your chosen expert advisor is using similar targets and stop losses themselves. Ideally a top quality robot should be looking for large profit targets using small stop losses, but sadly there are very few of these robots that actually do this.

So to sum up, the major reason why many of these forex robots ultimately fail to make any money is because they don't use proper money management rules. There are other reasons of course, such as the fact that a lot of them fail to adapt to changing market conditions, but this is one of the main reasons.

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