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Expert Advisors Reviews

Five Tips on How to Tame a Dangerous FX Robot

After our last article on gambling, which was rather critical, the lovers of hazard in trading may feel somewhat left out. I guess that at least some of you like to use riskier expert advisors (EAs), even when it's just for the love of the game. On the other hand, some traders purchase EAs because of their popularity and after starting to trade with them, feel surprised that what had once seemed as a stable profit-generating software, turns out to be a carnivorous creature devouring tons of money each day. 

This article aims to give some pointers to both group of traders – the ones who are trapped with a gambling robot after a hasty purchase and wonder what to do with it; and the ones who knowingly and willingly bought such an EA, but still could use some help regarding making the best out of it. On top of this, some of the tips given may be helpful to the users of any EA, or at least we hope so...

1. Withdraw the gains periodically.

This is a piece of advice targeted particularly at owners of gambling EAs, since the performance may vary widely across time. Think of a grid trader like the Happy Forex EA, for example, or the Zealot EA – they open a series of positions, using fixed intervals in time and price, and sometimes the chain of open trades may be quite long. If that's a winning streak, the balance flourishes, but unless you withdraw at least a part of the gains, you're in great danger of hitting a losing chain of orders. If this happens, your account may end up depleted – you may lose what you've gained and sometimes even your deposit.
Your aim is to win and withdraw an amount equal to your initial deposit – this means that afterwards you can gamble safely with the casino money. 

2. Follow the recommendations from the manual.

Manuals are written for the owners of EAs and when it comes to gambling or other high-risk strategies, reading the manual and sticking up to it is crucial. Let me remind you of our interview with Dmitrij Zaitsev - the creator of the Forex Warrior EA, a Martingale-based robot, who underlined the importance of tweaking a couple of safety parameters of the bot – the maximum drawdown level, for example. 
Hence, make sure that you read and understand the manual for an EA and contact the support team in case of trouble. Moreover, this will give you some idea about the EA's team future reactions to your questions.   

3. Test the EA on the MT4 platform.

An explicit hazard of gambling robots is that you just don't know in advance how that piece of software will behave in trading – all sorts of surprises are likely. That is why some backtests are unavoidable – instead of using the ones provided by the developers, we strongly suggest you conduct some tests by yourself. Once you upload the EA in question on the MT4 platform and apply it on a price chart, you should launch the Strategy Tester (by clicking on the button with the magnifying glass) – now look at the panel at the bottom of the page – select the name of the advisor, the currency symbol, and the model (every tick), then select the timeframe and the use date (the period for the test – at least a year).
Make sure to explore the Expert Properties and to select the trade contract size to be fixed (for a start, try 0.1 lots) and to adjust the time settings properly. Do not touch the optimization button, in case you're a newbie. 
Once you start the backtest and get the data, pay attention to the equity curve, the gain and the drawdown. The drawdown reading, usually given in $, is useful not only for assessing risk, but also for calculating your optimal level of initial deposit. Say the drawdown is 900 pips and you've run the test with the a fixed trade contract size of 0.1 lots, using the EURUSD pair. The drawdown is then $900, or 900 pips. If you would not like your drawdown to exceed 30% of the total balance, then your initial deposit should be $3,000. 
Increasing the trade contract size, and that's what gambling robots do (particularly Martingale-based ones), translates into higher investment on your part. 

4. Use cent accounts.

As you perhaps know, cent accounts give us a genuine feeling of trading with vast amounts of money, the ones that gambling robots always require. It's no surprise that the deposit recommended for the Forex Warrior EA, for example, is $10,000 – it requires money to support the account in case a number of trades run into a loss simultaneously and there is a danger of a margin call or even stop out. 
With a cent account, you can trade more safely: instead of risking $10,000, you'll risk 10,000 cents, or $100!
And since we're giving you some pointers on accounts, keep in mind to apply a gambling EA on a separate account. 

5. Use a VPS.

That's a piece of advice that all users of EAs can benefit from, but it should be a command for owners of risky EAs. As you know, Virtual Private Servers are remote hardware devices with an OS that permit trading to continue even when your PC is switched off. And that's very important in case there is a power outage or your kids have decided to turn the computer off. 
We've just given you several tips on how to control the strange animals in the jungle of EAs called gambling bots: needless to say that trading with them is very risky and no one can force you to play such a dangerous game. For those of you fond of risk, however, we hope to have extended a helping hand.
TAGS: dangerous  gambling  hazard  expert advisors  eas  martingale  grid  withdrawal  deposits  drawdown  backtest  vps  virtual private server  happy forex ea  manual  zealot ea  forex warrior  metatrader 4  mt4  cent account 
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