Forex robots are legal, but being legal does not mean that all forex robots are reliable and legitimate. There are so many forex robots out there nowadays, you need to know how to sift the good from the bad forex robots. I will help you do that by giving some useful tips about what to look for when choosing a legitimate forex robot in this guide. I will also give you an honest overview on the pros and cons of using forex robots to help you decide if automated forex trading is for you, or not.
Are forex robots legal?
Yes, it’s perfectly legal to trade with forex robots or any other trading robot for other instruments including stocks, commodities and cryptos. Although there are always going to be those doubters that have their objections to how automated forex trading can impact the markets, there are no specific rules or laws in place that restrict retail traders from using forex trading bots.
Just be wary that certain countries and broker might not support the use of forex robots, as they frown upon this method of trading. I have known forex brokers to block accounts from trading if they were unhappy with how a trader was using a forex robot. It is sad to day but this can happen when a forex robot is trading well and produce good gains. This could attract the brokers attention and if it is costing them money, don’t be surprised to see the forex robot banned from trading.
Are forex robots legit?
The answer to whether a forex robot is legit or not is that it depends! Yes, there are legitimate forex robots that do what they are programmed to do and can make profits. However, just because a forex robot makes a loss, this does not necessary mean that it is not legitimate. It could just be that the broker or market conditions were unsuitable during the period you were using it. I have seen trading bots go through good and bad periods, as with any manual or automated trading system.
That being said, there are forex robots that are not legit and should be avoided at all costs. Any forex robot that makes claims it can earn “x” amount of profit over “x” amount of time, I would personally avoid. Anyone who makes such claims cannot be trusted simply due to the fact that nobody can 100% predict what will happen in the future. If my years in the forex industry have taught me anything it is that anything can happen and therefore nothing can be guaranteed.
Do forex robots actually work?
Yes, forex robots do work but as mentioned above, that does not mean that they will make profit. A forex robot working can simply mean that it does what it has been programmed to do. If the underlying trading algorithm or money management is not properly thought out, then the bot may trade according to this algorithm but make a loss.
If you are thinking a forex robot will print money then you are sadly mistaken. I think that too many aspiring forex traders do not want to do any hard work and expect a forex robot to make them a millionaire overnight. There is much more to forex trading than that. If this was the case, everybody would be using forex robots and for sure, the developer wouldn’t be selling them for a few hundred dollars.
This does not mean that forex robots don’t work, there are those which do work, some even better than expected. I am just trying to reiterate the fact that because a trading robot does not win every trade, this does not make it a bad robot or even a forex robot scam. I have seen forex robots that can go on winning streaks for a year then have a poor 12 months performance following on from that but still be up overall.
If a forex trader was to start using the robot in the first 12 months, they would probably be happy with it. However, any trader who started using it after that for a year, may be in a drawdown and complain that the forex robot does not work. We live in a world where everybody wants everything right away, so it is no surprise that the majority of retail traders lose money and give up.
Are trading robots reliable?
Without sounding too harsh, I would probably say no. Then again, I wouldn’t call any form of forex trading or investing online reliable. This is because anything can happen in the financial markets, including unexpected black swan events that can crash a whole market and cause significant losses. I would certainly not rely on making profit from a forex robot to pay rent or bills. I would personally only use any excess cash that I can spare and afford to lose.
That being said, I find some forex robots to be more reliable than others. For example, if a forex robot uses a tight stop loss and has a favourable risk to reward ratio, it can still make gains even with a win rate below 50%. On the other hand, if a forex robot has a wide stop loss that will wipe out multiple winners, I would not consider this reliable as the win rate would need to be consistently high.
You then have to think about the difference in results between forex brokers. If a forex robot requires really tight spreads and low fees, it might not be a reliable robot as it can only thrive given the ideal conditions that might not be achievable from the majority of brokers.
I have seen forex robots give a completely different set of results using the exact same settings, simply because of a difference in trading account conditions when it comes to the forex spread and commission fees. This is often the case with forex scalping robots that need the absolute ideal conditions at all time to have any chance of succeeding. That does not make them bad robots, it just means they might not be as reliable as some other forex robots.
How to find a good forex robot?
There are a few important things that you can look for when choosing a reliable forex robot. I would want to check to see if there are any real live account results that have been verified by a third-party such as Myfxbook. The results should span across at least 6 months so that we can see how good or bad the robot has performed through different FX market conditions. Even then, that does not mean future results will be the same as what has happened historically speaking.
Also check to see what forex broker that robot has been tested on. I have seen some forex robot developers provide real live verified accounts on shady brokers who are giving them unrealistic conditions just to try and attract clients to both the robot and broker. I would always look for a regulated forex broker with a solid reputation in the industry.
Be wary of robot developers that try to pass demo account as real accounts. These fake results can trick unsuspecting users and give them even more unrealistic expectations than they may already have. You could always check with the broker in question just to make sure the account is real and not a demo if the developer is claiming it is.
After live results, I would look for any back tests. These back tests should show historical testing results of the forex robot across all of the currency pairs and timeframe that it has been designed to trade. If you are considering a MT4 robot, make sure that it has been back tested in the MT4 strategy tester, ideally with 99% modelling quality. Robot back testing should include real variable spreads, commission, slippage and tick data. Otherwise, the results will be very inaccurate.
If a developer does not provide back tests over as much data as possible, then you might want to ask yourself why this is. I tend to think it is because the back-test results show a poor performance whilst others will try to argue real verified accounts are what is important. I would want at least both back tests and real results if I am considering a forex robot to be legitimate.
After real results and back testing, have a look at the trading strategy and money management that the forex robot uses. If it is using any dangerous martingale strategy or grid trading system, it might not be safe. Whilst these types of forex robot can go on good runs in the perfect market scenario, they will can cause huge drawdowns, margin calls and blown accounts more often than not.
I prefer a forex robot that has universal settings on all of the currency pairs and chart timeframes that it trades. This shows me that the bot is using a trading strategy which has some logic behind it rather than one that has been over optimised out curve-fitted on a specific data set. The longer the strategy has been performing well for, the better. Always keeping in mind that every forex strategy will go through good and bad periods.
Some of the other things to consider when looking for a legitimate forex robot include customer support, if instructions and set files included, if there are free updates for lifetime, how many licenses you will get, if you can demo test it and if there is a money back guarantee,
Advantages of forex robots
- Hands-free automated forex trading strategies
- So many paid and free forex robots to choose from
- Can check the historical performance of forex robots
- Most have default and fully customisable settings
- The majority of forex brokers allow forex robots
- They are generally legal to trade without any restrictions
Disadvantages of forex robots
- Forex robot results cannot be guaranteed
- Lots of forex scam robots to try and avoid
- Developers can provide false statements
- Unrealistic expectations for those without experience
- Some forex robots can be very dangerous
Conclusion: Are forex robots worth it?
If you do not have the time, knowledge or skill required to trade forex manually, then forex robots can be a good solution. They enable users to trade the forex market 24/7 without needing to do any complex market analysis, place or manage trades. However, they cannot guarantee results and many forex robots lose money based on my experience testing literally thousands. You can see a selection of my best forex robots for some of those which have so far stood the test of time.
I just don’t think anything can beat learning how to trade forex manually. This way you can learn from your mistakes and become a better forex trader in the long run. You won’t have to depend on or blame anyone other than yourself. If a forex robot was to stop working and the developer was to disappear, you would need to start from scratch all over again. If you have no choice but to use a forex robot because of time restrictions, then you might want to start testing them on a forex demo account to begin with and see how things go. This will allow you to get a feel for how forex robots work without taking any risk. You can also read more guide on forex robots for some further information.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.
