I founded a swiss based corporation based on forex robot in 2012 - ThirdBrain SA - then you are waiting for me a long speech about how this robot are well done and make profit.
It’s not my goal. I am not anymore in the company in any case but I would like to share with you my discovery of the Forex Market at different level :
As client, first, 10 years
As Expert advisor producers, 6 years
As Broker, ThirdBrain SA was broker with an European Solution during 2 years
As Official Wealth Manager under Swiss Market Authority Regulation, 3 years.
As External Asset Manager for UBS during 1 years accessing then to their private back office.
I know regulation, I know actors - even if I did not meet a lot them staying in my developer cave, and i think I know a large part of the true story beyond Expert Advisor.
First, robots works. The large part of the banking operation are now operated by robots. Artificial Intelligence and machine learning found in finance a perfect field where all data can be mixed and there is a lot of data there. Finance is a natural playground for all data lovers.
But Finance is a matter of trust and trust doesn’t come from Math.
You build trust.
You would say that your build trust on performances.
Yes and No.
Who exactly know - except if you are a specialist - knows the performance of the big hedge-funds and/or the pool of traders a the large banks ? Their ratio ? Their way of trading really.
At least a large part of the orders are now sent by Robot in any case. Humans become more and more only a supreme monitor who only looks time to time to ratios built by Robot for Robot.
All Finance is in the hand of robot finally. All the day to day finance - the finance seen everyday by the majority of people reading me now.
Complex instrument only answers to marketing consideration to segment market and answer to a need of complexity a front of an ocean of simplicity.
But « the robot works » is the true allegation for the high level finance world. Means where billions are playing with others millions.
BUT We are speaking about the Expert Advisor which concern retail traders who are clients of brokers and uses expert advisors.
Differences are big between this 2 worlds of robot for finance and expert advisor for everybody and a lot of game changers are playing.
Hedge funds using robot are playing with low leverage 1:2, 1:4 ect..because they are playing with a lot of money and needs to minimize looses then algorithm needs a lot of capital AND low leverage. The funny things is that the majority of this algorithm could not have any good result with high leverage we can see with a retail broker : 1:100 up to 1:1000 now.
The Expert Advisor « for everybody « needs to play with high leverage then a very high risk compared to the hedge funds ones . The Expert Advisors you can use on Metatrader or other trading client have all in commons several characteristics :
1 - They are broker dependent. Their result depends on the feed of the broker, the spread, the speed of the servers of the broker and a lot of others technicals consideration you can’t know and can’t manage. To illustrate that with ThirdBrainFx, our results vary a lot from one broker to an another : https://www.thirdbrainfx.com/global-account-performances.html
2 - You won’t have the same journey of the « model trading account ». Indeed, if you are taking the expert-advisor at the end of the good times and begin to experiment the classic drawdown behind, you won’t have the same results like the results displayed. You will be loosing while other were winning. It’s not « cheating », it’s only logical.
3 - If you are using mirror trading or copy trading or social trading platform, the latency will be your first enemy. Few of the known platform can deliver right the signals: they can miss orders (first) but also send you late some orders. If the strategy is aiming a very low winning average benefit, you will be impacted hard.
4 - A lot of expert advisors « amateur « are done by people who are only programmers and not traders. They can do a good job finally but you need to test the expert advisor on a demo account before to switch directly to a live. An EA who is poor coded will finish by kill your account. A good EA takes time to be tested. Only time gives value. Because of the « broker sensitivity » , an EA needs to adapted to the feed of your broker to perfectly fit with your spread, latency of servers and others keys datas
5 - An EA is not necessarily a long-term choice but could be a short win: you finally may have more luck to win playing with an EA than playing lotery, in this case, you can use it several weeks to make some % and just stop when you get the benefit switching to an another.
6 - If you are starting 10 accounts, you will have 10 different results and may loose i. It’s something you need to know and it’s perhaps why you need to launch several accounts with the same EA, different broker and at different moment to really judge its performances.
7 - A bad EA playing in demo will be worst in live. A good EA in demo won’t be necessary good with a live account.
Some EA works very good with the feed of one instrument for one broker and is terrible with another broker because trading conditions are not the same. It’s difficult to see that before experiment it .
Feeds for demo are not exactly the same like for live and live accounts are not all the same too even with the same broker.
Then following this 7 bullets points, if you want to avoid the hard discipline of a lone trader, you need first to select a good broker, download some Expert Advisor and test them in demo with the same capital you will go with in live with it.