Back-Testing
Nearly all vendors would sell their FX robot based on the success of their back testing. Back testing is crucial as it presents you the robots potential profit on live trading. Nonetheless, you should not only focus on back tested result for it does not guarantee a successful forward trading. Why? Mainly since the back tester might ignore market conditions. In live trading, you will be able to see the gaps in prices during news announcements and market spikes. You may also notice the big spread between bids and ask prices of the currency pairs which will possibly affect your trade due to the excessive slippage.
Advance Live Trading
The absolute finest proof is live trading. There are not much robot vendors that uses live trading to gives support to their claim that their robot is the real thing. By observing the live trading account as it occurs, you can notice how accurate the back testing report of the robot.
Managing Money
No matter how well a forex robot appears to be in live trading or back testing, we can never predict the future effect will be. For this reason, we got to employ adequate safeguards - firm money management rules. This is the key to triumphant long term wealth building via foreign exchange trading.
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