Given the extraordinary number of Forex Expert Advisors available online, it is very easy for someone to buy something that does not work.
Let’s face it. We all want to believe the things that the creators of most Expert Advisors tell us. We are usually attracted by the simple idea of an EA, therefore vulnerable to the trap. We are dazzled by their back and forward tests, by their profits, their small drawdowns, simply, by the promises of success.
The objective of this short article is to tell you a few things that should instantaneously raise a RED FLAG inside your brains when buying an Expert Advisor.
This one is the biggest red flag. If the web page or author states that the EA has 100% winning trades with absolutely no losses. Come on, I can show you scalpers that perform with no losses for 4 months in a row, then give everything back (the whole account) to the market in just one or two trades. Don’t be fooled by any backtests or forward tests.
Profits are too high. You see backtesting and forward testing that shows that the EA has a 20% monthly profit. Well, it is there in FORWARD TESTING. That does not mean a thing unless you have at least a year or two of testing. An EA can perform amazingly well giving the right market conditions (this may change in the next few months). 20% profit or more with less than a year of forward testing… Safer to wait a year!
No Stoploss. An EA seems to have incredible records but has no stop loss. But hey, it has this witty mechanism to exit the market or this 99.9% successful trade record. It does not matter. It is only a matter of time before the market kills that witty mechanism or gives you that 0.1% of losing trades towards your margin call. Trust me it will happen, sooner or later, it will. Sorry, but you're better off in a train with brakes.
You find this fantastic Expert Advisor, everything seems absolutely correct. Tests, stop loss, all the things that God knows an Expert Advisor must have. But hey, where are the humans? Nobody has ever heard of this EA. In reality, there are bad people out there, and you cannot risk your money to someone that is faking results. If there are absolutely no independent biased reviews of the EA. Sorry, you prefer a human opinion!
Yes, I know, this four little red flags will be raised for more than half of all the Expert Advisors available on the market (90% would be my best guess!). But hey, the will, almost for sure, keep you safe from the dishonest people out there trying to snatch your money for that money eating machine they call an Expert Advisor. Remember, if it is too good to be true…