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Why Choosing a Signal Based System May Be Better for your Account
By plrprousers | May 19, 2009
Quality automated trading systems are hard to find. Automated trading used to be something that was reserved for big banks that would use massive computing power to build and trade stocks and currencies based on complex market models. Now, these capabilities have been brought to the masses as high-end, modern PCs have enough computing power to do the job and automated trading systems are sold on the internet.
The game has changed. Enthusiasts and speculators who have risk capital to spare, open accounts with brokers and then purchase automated trading systems from websites to auto-trade within their account. Forex trading on the MetaTrader platform has become a popular interest for people who want to put their computer to work for them by running automated trading software in order to earn extra passive income with risk capital. As great as it is that this technology is coming into the mainstream, finding quality automated trading systems has become much more difficult as Internet Marketers who know more about selling than engineering trading models, have flooded the market with slick sales and review websites that make exaggerated earnings claims for trading robots (a.k.a. “expert advisors” or “EAs”) that over promise and under deliver on performance.
To compound matters, most of the truly talented developers have been turned off to the fact that their trading algorithms can be reverse engineered by unscrupulous profiteers on the internet. The incentive for bringing quality trading systems to market has diminished to the point that the marketplace is mainly filled with false hopes. There are only a few “real deal” players out there who unfortunately get lost in the noise because their expertise isn’t in marketing… The real players specialize in developing trading systems and generally don’t do as well when it comes to sales and marketing.
TradeForexSoftware.com is a company that offers signal software to allow Traders and System developers to broadcast their trading signals from a central publishing server on the internet, directly to a subscribers’ computer to auto-trade within their MetaTrader account. They screen numerous trading robots and are very selective in allowing only the highest quality trading systems to become signal publishers with their software. We asked these experts about the top three things to look for when evaluating an automated trading system and here is the scoop:
1. Look for a no charge trial evaluation - if the performance is good then should you be able to try before you buy on a demo account. After a few weeks testing in a demo, the subscription can pay for itself if you choose to trade with real money and “pay for performance” using the positive returns. A money back guarantee is also good but asking for a refund can be a hassle and not getting billed until after a trial period is better than paying upfront.
2. Subscribe to a signal service – auto-trading with a signal service is beneficial to signal publishers and subscribers.
- Some people have reservations about paying for a monthly subscription fee instead of a onetime sale, but you really do get what you pay for. You want a trading system developer to have a long term interest in making sure that the system continues to work month over month. You don’t want to buy a trading system from someone that will just take your money and run. You want them to have “skin in the game” and have an interest in keeping you as a paying subscriber.
- Additionally a subscription means fewer configuration settings to tweak. Many non-signal based trading robots will require you to constantly tweak settings as market conditions change in order for you to profit. Peddlers of Trading robots will often charge an additional fee for you to become a member of a “special club” in order to get daily configuration settings for their EA. Don’t fall for it! If you need to pay to join a club to get constantly changing settings for a robot just to make it work as advertised, you’re much better off to simply subscribe to a signal and let the signal publisher deal with all of that. With a signal, the only setting you may want to control is the risk level; the signal publisher takes care of everything else.
- The final reason a signal is a smarter choice is that non-signal EA developers know that their systems can be reverse engineered. You have to ask yourself, is the trading robot that they are selling really that valuable if they know that anyone on the internet can take their algorithm once they get their files? If the trading robot isn’t signal based then the system developer may just want to take your money and run.
3. Look for a live statement – You want to see a trading statement on the website that shows a history of closed trades so that you can assess performance. Take advantage of the signal’s trial period and compare your results against the closed trades in the published live statement.
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