It is a little known fact that “robot” trading has grown exponentially in the Forex market during the last few years. Robots are simply automated programs that are based on mathematical formulas derived from historical market patterns.

Robots do not work, and that is a real problem.

Of course, you are bound to hear stories of how someone turned $10,000 into $150,476 in just a week’s time…but those stories are not true. It’s all marketing and it’s based on the theory of historical trading.

Fact: When Forex traders employ Forex robots, they LOSE MONEY.

Fact: Robots have disproportionate risk management programs in them which result in them losing money.

Three pips, seven pips, nine pips — the quick, small profits are what Robots seek. And over a number of trades, the Robot will have a high percentage of winners - 85 - 95% will be winners, in fact.

But there is one major problem with the Robots, and that is that their stop losses are not in line with the typical reward to risk ratios, normally something like 1:5 or 1:10 (which means that you, the trader, are putting $10 at risk in order to win $1. When you gamble they refer to this as “sucker betting” and you are the one who is the sucker.)

Here’s the scoop on those Robots: Because the stop losses are set so wide, just ONE TRADE can demolish the profits you earned from all the winning trades. The reason for this is that in comparison to the losses you sustain as a result of the built-in risk - or lack of it, your gains are minuscule.

The percentage of profitable trades and the reward/risk ratios are inversely proportional to each other. The bigger the percentage of profitable trades, the smaller your reward ratio; conversely, the smaller the percentage of profitable trades, the bigger your reward ratio.

So this means that your reward to risk ratio will be approximately 1:10 if a Robot has 90% winning trades.

The facts? Don’t concentrate on ‘winning percentages;’ instead, concentrate on managing the risk involved in each trade and keeping the reward to risk ratio in YOUR favor.

Proof is provided in this video of how this concept can make a huge difference in your Forex trading: http://www.profitabletradingtips.com/private-forex-training

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