Pip Cop - Forex Robot Reviews - View Single Post - WARNING: When should I buy a robot and run it on a live account?

**rsmereka** · 2009-11-25, 09:03 AM

Hi Mike and Welcome,

In my experience, brokers don't keep the demo feed as accurate as the live feed. I noticed this when I was running the same EA on a live account and on a demo account with the same broker. This leads to very different results live verses demo. That is why we say here to:

1. First look at the backtests. These are not definitive but are a rough indicator of the EA's performance. I especially look at the EA's performance on backtests through multiple years. Most EA's fail this test. Many EA's are curve-fitted which means that they perform well in the current market conditions or in specific market conditions.

2. Once you have identified an EA that has acceptable backtests. Ask the question: Does this EA fit into my trading style? All EA's have a down-side. Is the down-side of the EA you picked acceptable to you?

3. Put the EA on a demo account for at least three months. Fund the demo account with approximately the same amount of money that you would with a live account. During the demo period, keep track of the account balance each day as well as the floating DD percent. Set the risk percent to a conservative value and gradually increase this. Make note of the lot size for a specific balance and risk setting.

4. If the EA gets this far, you are ready to go live. My preference is to put the EA on the live account in reduced risk mode and gradually increase the risk percent (same as you did with the demo account). The main reason for this is that you will notice that the EA performance is different than the demo account.

If at any time during the evaluation, you notice behavior that you consider unacceptable, dump the EA and start again. It also helps if while you have an EA on a live account, you are also looking at other EA's. Always have a replacement ready just in case.

Yes, there are brokers that trade against their clients. Many greedy brokers are not satisfied with making money from the spread and know that 85-90% of traders fail in the first year and another 8-9% fail in the second year.

What I am saying here is go slow, record everything, have a plan well in advance and stick to it.

I hope this helps,
Rick

2009-11-25, 09:03 AM	#4 (permalink)
rsmereka Site Supporter Trader for 8 - 12 years Location: Southwestern Ontario, Canada Posts: 1,777 My Trading Journal Trading Live with: Forex Hacked(Copier)	Hi Mike and Welcome, In my experience, brokers don't keep the demo feed as accurate as the live feed. I noticed this when I was running the same EA on a live account and on a demo account with the same broker. This leads to very different results live verses demo. That is why we say here to: 1. First look at the backtests. These are not definitive but are a rough indicator of the EA's performance. I especially look at the EA's performance on backtests through multiple years. Most EA's fail this test. Many EA's are curve-fitted which means that they perform well in the current market conditions or in specific market conditions. 2. Once you have identified an EA that has acceptable backtests. Ask the question: Does this EA fit into my trading style? All EA's have a down-side. Is the down-side of the EA you picked acceptable to you? 3. Put the EA on a demo account for at least three months. Fund the demo account with approximately the same amount of money that you would with a live account. During the demo period, keep track of the account balance each day as well as the floating DD percent. Set the risk percent to a conservative value and gradually increase this. Make note of the lot size for a specific balance and risk setting. 4. If the EA gets this far, you are ready to go live. My preference is to put the EA on the live account in reduced risk mode and gradually increase the risk percent (same as you did with the demo account). The main reason for this is that you will notice that the EA performance is different than the demo account. If at any time during the evaluation, you notice behavior that you consider unacceptable, dump the EA and start again. It also helps if while you have an EA on a live account, you are also looking at other EA's. Always have a replacement ready just in case. Yes, there are brokers that trade against their clients. Many greedy brokers are not satisfied with making money from the spread and know that 85-90% of traders fail in the first year and another 8-9% fail in the second year. What I am saying here is go slow, record everything, have a plan well in advance and stick to it. I hope this helps, Rick __________________ MyFXBook Live Statement Mt4Analysis Last edited by rsmereka; 2009-11-25 at 09:08 AM.