Automated Forex Trading System - Most Forex Robots Suffer Losses Because There Curve Fitted

Automated Forex Trading System - Most Forex Robots Suffer Losses Because There Curve Fitted

by Samuel Leslie Berkovits

Automated forex trading software is big business online and forex robots are the buzz product at present but most will wipe your equity out and do it quickly. Why? The answer lies in curve fitting...

When traders buy automated forex trading systems, they are presented with a track record and they think this track recorded will repeat for them but of course the track record is not real at all - it's a simulation going backwards with all the facts to hand.

Now if anyone knew the price in advance they would be a millionaire many times over but we don't. The vendors who make these robots curve fit the track record and this is why you will lose.

Constructing the Track Record

They get a segment of data and try and get there rules to work and keep bending and tweaking them, until they do. In Conclusion they make the system fit the data, now here comes the problem...

The Problem with Back Testing

Is no two segments of data ever repeat themselves EXACTLY Again and the system cannot be bent in the real world, so you get an equity wipeout. Any system that is bent to the data is likely to suffer this fate.

So that track record of 100k a year you see ( all for just a hundred dollars) has no chance of replicating itself for you.

Getting a Successful System

You can get some that are not curve fitted and normally the vendor will trade it for a while before selling it and show real results.

Some simulations can translate into real profits but there few and far between. Generally, if you are looking for a good one, look at the rules and the list below, will tell you if the system is curve fitted.

Here are indications of a curve fitted system.

- Lots of rules and parameters the more there are the more curve fitted its likely to be

- Different rules for different currencies

- Different rules for different market conditions

- Any subjective judgment you have to make on spotting set ups

A good forex trading system will be simple, robust and trade all markets and all market conditions with the same rules.

Use Common Sense!

Be realistic when choosing an automated trading system.

Don't fall for get rich quick forex robots that are heavily advertised, there normally curve fitted and will see you lose. Common sense says, you don't get an income for life for hundred dollars.

If you want a good system, look for one with a track record of real results or, if you want to try a simulation, keep in mind the checklist (we outlined earlier) when choosing one.

A FREE Forex Robot That Works

If you want a free one which is not curve fitted, we are huge fans of the 4 week rule which beats over 90% of the sold systems easily and its free. Check out our other articles for more information on it.

So if you are choosing an automated forex trading system remember - beware of curve fitting!