Analysis criterion
How to analyse robots to avoid scams? Many criteria to pay attention to are presented here. It’s up to you to be careful not to get scammed.
I will talk here about my main criteria for analysing a robot, I argue and explain my vision to you.
I will only analyse robots in Metatrade 5 version.
Here is the robot market: https://www.mql5.com/en/market/mt5/expert
Table of Contents
Grid
The Grid method consists of opening trades at regular intervals, in general the series of trades is open to loss. This principle resides on the possibility of making profits if the market makes a correction of the direction. So if the market is raising a new sell position will be open every 20 pips (for example) and if the market shows a slight downtrend in a strong rise, it is possible that the sum of the sales is in profit and that the robot closes all positions for a small profit. Very often this strategy is done without having a stop loss, which is very dangerous! Indeed the positions will open one after the other until the total liquidation of the account. In general these strategies are used for the short term. You notice them on the equity charts you see in the signal. Very often the line of equity always remains under the balance.
Martingale
The martingale consists of opening an order which will be multiplied by a coefficient in order to reimburse the previous loss. For example, if the size of the previous losing lot is 0.01, the next bet will be 0.02 with the same TP in pips as the previous SL, if this too is a loser, we will multiply the next one by 2 and we will have a size of 0.04. It is possible to repay several losses in one winning trade, you just need to have enough money to support an increasingly larger lot size! We come to its disadvantage, it can quickly explode the trading account. It really is a very short-term strategy. It is possible to couple the martingale with the grid, suddenly the positions are not closed, but left open and the size increases.
The sign that it is a martingale on the equity chart is to see equity spikes, a sign of a large lot size to use.
Stop Loss (SL)
A stop loss (SL) is present to limit losses, thanks to the stop loss you can avoid losing a lot of money on a losing trade. It is true that it is hard, but it is better to stop the progression of a loss, even if you see that the SL is touched and that just after closing the position at a loss you see that the trend reverses and that you would have made money… It’s paradoxical, but even in this case it’s good that there is a stop loss! I find it essential. In trading you have to accept it, you can’t win every time!
The stop loss is visible on the chart and the broker knows your stop loss, it is the broker who will automatically close your position as soon as it is reached! even if the robot is not active or your VPS has a connection problem. The stop loss is in agreement with the currency management, it allows to risk an acceptable part of the account.
Stop Loss Virtual
A virtual stop loss is like a stop loss except that the robot is the only one to close a position, which means that if for some reason the robot fails to communicate the closing of the position, your position remains open ! The closing request can be processed more or less quickly, it may happen that the position changes while it is closing.
It is also a way to close a position before the SL is reached, because the strategy identifies that the indicators are no longer favourable to the position. In this case a position can be closed at a loss before having reached the stop loss.
Take Profit (TP)
Take profit is similar to stop loss except it closes the winning position. Why do that ? Sometimes the chart executes a spike and just skims the TP which closes it before reversing the trend. The desired value has been reached and secure, but why close a position that will earn more if it is expected? Nothing says that the situation will improve, once again it is good to accept these gains without being too greedy.
The absence of Take Profit is not favourable, because the open positions are without any goal to reach in this case only the robot closes the position with precise criteria, but without being known. Sometimes these criteria can be more difficult to achieve.
Take Profit Virtual
Virtual take profit is like virtual stop loss and take profit. It closes winning positions with these criteria and benefits from the same disadvantage as the stop loss.
Ratio
The ratio is the ratio of profit divided by loss. We take the averages by position to be more precise. It is used to determine the risk taken per position. Imagine risking €10 to win only €1? In general, this makes it possible to have a high rate of winning, because the Win percentage is high. Indeed it is easier to reach the TP than the SL. Very often to use it is utopian to believe that it is for the long term, in general it is difficult for these robots to recover only 2 losses. Conversely, it makes more sense risk €10 to win €100, right? In this case the winning percentage will drop, but a single win can erase several losses.
I think it’s better to have a ratio greater than 1.
Over-optimisation
Over-optimisation consists of having a strategy that responds very well on test data, but this strategy does not work as soon as it is in the real market. How to detect these strategies? It’s quite simple, the creators obviously show the information of a favourable given period, but these strategies are not favourable if you test them on the previous years. You can see on the test that if you go outside the perimeter defined by the creator, the robot only makes losses. That’s why I make my robots by testing it over the entire historical period. Because those who only make over a given period simply rule out stock market falls and other events. That’s why I test market robots on the entire history, I don’t rule out the difficulties of walking to obtain a nice rising curve without loss.
Signal
Just see if the author makes a signal from their robot available for all to see. This makes it possible to continuously monitor the behaviour of the robot. Be careful not to naively believe what the signal says, because it is easy to manipulate a signal. Only the author knows which robot is behind the signal. None guarantees that the robot for sale is indeed this signal. You will have to check for yourself by doing back tests and comparing the results. The signal is sometimes a selling point, but it is not impossible that the author therefore has 20 hidden signals and he only displays the best signal the other 19 signals are simply robots or different parameters, but the other 19 signals are at a loss.
This is why it is important not to rush to a robot and buy it too quickly. Take a good look and study it before buying.
Price marketing
You will certainly see it very often and that is what will cost you the most! the authors force buyers into compulsive buying! You will all have seen this sentence: 2 more purchases before the price is $299!
The buyer rushes to the robot to buy it before its price rises too much. Yet the robot remains the same, and very often these few words make the happiness of authors who manage to sell their robot very quickly in a few days! I’m talking about tens of thousands of dollars!
Yes, but in itself it is not a bad thing? He uses to market to sell better! Yes and no, 99% of the authors who use this marketing strategy have their robot which will no longer be present on the market in 3 or 4 months… How come?! Well, yes, this marketing strategy allows you to sell quickly and after the author’s love to say: my strategy is for the long term. OK, if it’s for the long term why sell lifetime licenses? If the authors make a rental they will be winners, because in the long term the buyers will continue to buy continuously, every year or month! it’s a regular money in for the author, it’s more sales!
This strategy pushes buyers to blame and do not think you will return to the mql5 site for a refund, the site will not refund and that is normal. The site cannot say that the author is a scammer, in itself it is a walking robot. It opens and closes positions while respecting limits, these limits are the maximum number of positions of the account, the size limits of the positions… It is more of the securities which allow a good functioning.
As a reminder: no robot can guarantee winnings! Nobody knows the future. This is why the robots must secure their position as best as possible.