WARNING: When should I buy a robot and run it on a live account? - Pip Cop

**PipCop** · 2008-11-14, 11:54 AM

I frequently receive messages from members telling me they have purchased a robot which is currently under review on the site, and they intend to put it on a live account. This is often done based on the balance they see in the Quick Stats, and they simply choose the one with the highest balance. Let me give you a word of advice:

DON'T!

The concept of PipCop.com is to review robots for you, and they follow a very strict schedule. A robot MUST perform well for at LEAST 90 days on a demo account before I would even consider putting it on a live account. In addition, the robot MUST have good money management

tendencies. When I do put it on a live account, I will NEVER put it on an account with more than $250 until it has proven it can perform well.

I also frequently find that a Forex robot does not perform properly the first time it is set up, due to settings being wrong or sub-optimal, the brokerage not being compatible with the robot, a problem with MetaTrader, or a variety of other issues. As a result, you should ALWAYS test a robot on a demo account first!

Too often have I seen a robot shoot to the top of the Quick Stats with a great balance, only to crash down to zero a day later - usually wiping out the entire account balance.

Just because a robot makes a few good trades over a few days does NOT mean it will continue. I have seen plenty of robots get 10 winning trades in a row, then have just one that wipes out all the wins AND dips into the original equity, leaving the account decimated! Even if a robot does well for 1 or 2 months means nothing. At the very least 3-6 months of careful review should be done.

If you have not reviewed the statements, you have not determined the money management

technique, and you have not been PATIENT with the review, I can pretty much guarantee you will lose your money!

DO NOT MAKE THE MISTAKE OF TRADING LIVE WITH ANY ROBOT THAT HAS NOT BEEN FULLY REVIEWED BY PIPCOP OR HAS BEEN TRADING FOR LESS THAN SIX MONTHS ON A LIVE ACCOUNT!

To better protect your money, you should read the following topic: Review Criteria

Notice that there is a VERY specific path a robot must follow to be considered even remotely safe to use on a live account. The icons will warn you as to past performance, and you should review ALL PREVIOUS STATEMENTS and check for large draw downs or losses. The reason why all statements are kept is so you CAN do your homework and you CAN protect your money. As a result, be careful with your money. Don't put all your funds into one account with one robot. Protect your money - use only a small percentage first. Let it build up over time. I use a 3 month trial with a small amount, then perhaps adding a little more money if things look good.

Remember, you will lose sooner or later - be wise and risk only a small portion of your portfolio.

If you choose not to fully research a robot based on what data is available, then you likely will lose your hard earned cash. Even if you do your research, it is entirely possible a robot may fail to perform on your brokerage, or there may be a change in the market making the robot lose money.

Ultimately, letting a robot trade for you involves MORE risk than trading manually. You must keep an eye on your robot and understand how it works, and you MUST be prepared to manually close losing trades. A robot is a tool to help you trade - not a replacement for using your brain.

**PipCop** · 2008-11-23, 04:01 PM

Here is something else I have learned after running all of these reviews.

If you decide to purchase and/or run an EA, you should do it on a demo account first, and you should compare your results to those of the author's live results.

I have found that in many cases, then EA performs differently on my platform due to errors in setup. Therefore, you may find that the author makes 5 trades one day, and makes $100 profit, but your version makes no trades, or loses money. and is making trades at a different time. This can be due to differences in the data feed (brokerage) or the time zone you are using.

By testing on a demo account first, and ensuring the settings being used are proper, you can protect your capital. Once you are sure everything is working right, then put the EA on a live account with the same brokerage and settings.

fxtrader523 · 2009-11-25, 02:58 AM

Hello. My name is Mike (aka fxtrader523). Im new to EAs and have no confidence with these "bots" (especially their ads) not until I began reading reviews about them. I started to get curious then. Thanks to ForexPeaceArmy and now PipCop. I started to learn trading over a year ago (still trying to learn the hard way till now) and have lost more than $2600 already. I have heard all the hype of EAs and all the possible frustrations it can bring to anybody. I also have realized how difficult it can be to trade with real money (thanks to Mr. Mark Douglas and Dr Alexander Elder). This might be the reason why I am reading EA reviews right now.

I deffinitely would like to try one one day. Thanks to the Authors of this review site.

I have questions. Why do we get different data feed from the same broker

? Are thier really brokers who trade against thier clients? How do I know if I am being cheated or being traded against by my broker

?

Thank you.

**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

fxtrader523 · 2009-11-25, 11:53 AM

HI Rick! Thanks for the enlightening information. I believe no EA can replace the human brain. The only thing that EAs can replace is the emotion of a trader while trading live but thats all. Ill watch for results about megadroid. Fap Turbo informations are quite confusing to me at this point

but I find more positive results than negatives.

Please, if you have additional informations about other EAs...please let me know.

Thank you very much.

MIke

fxtrader523 · 2009-11-25, 11:57 AM

I saw your live trades Rick. CAn you please tell me what bots you used in your alpari account?

Thanks.

**rsmereka** · 2009-11-25, 02:39 PM

Quote:

Originally Posted by fxtrader523

I saw your live trades Rick. CAn you please tell me what bots you used in your alpari account?

Thanks.

Hi Mike,

I don't want to get too far off topic here but are you referring to the EA's that I have used in the past or currently use or both? The EA's I currently use are listed along with every post I make on the left. I have used many EA's in the past and they are all documented in my trading journal (a long story and a wild ride

) which documents everything from last November up to last Friday. I suggest that you read my journal and if you have any questions, please ask them in that thread.

Rick