But then one day, something goes wrong. Your algorithm begins to under-perform. You might not even notice it right away. But after a while, as you watch your stats keep dropping, it becomes undeniable. Your algorithm no longer can keep you profitable. What can you do? This guide goes over the steps to get back on track.

Immediately stop trading live with that algorithm.

The first thing to do is to turn off the automatic trading using the algorithm in your live trading account. That way, you will stop losing real money with this algorithm. There is no reason this situation needs to bleed you dry.

If the algorithm is yours, begin the troubleshooting process.

If you created this algorithm, and have the ability to edit it, that’s great. It means you have the power to do something about the problem directly.

It is time to start analyzing what is causing your algorithm to stop producing the expected results. Here are some things to look at:

• Whether market conditions have changed.
• Whether adjusting certain parameters would make the algorithm profitable again.
• Whether there have been issues involving execution.

Sometimes you’ll find that your method has to be adjusted to work in a new market regime. Or perhaps you need to stop it from firing off trades in certain contexts. There are a lot of possibilities for what could be causing the losses, thus the exact steps needed to fix the problem can range quite a bit.

Test out improvements to your algorithm.

If you think you have identified and remedied the problem, you should try trading with the algorithm again. But make sure you do this step in demo mode so you are not putting real money on the line.

If your algorithm begins to perform as expected again, return to live trading with it.

If all goes well with your test, you may be able to return to trading with the algorithm in your live account. Consider staking a lower amount than you usually do just to be on the cautious side for a while. Then increase it once you are sure things are back to working as they should.

If the algorithm still doesn’t produce profitable results in demo, you will need to go back to troubleshooting. Rinse and repeat until you are finally able to go live again. Do not be afraid to ask for help from other traders.

If the algorithm is not yours, wait and see if it will be fixed.

What do you do if the algorithm that stopped working is not yours? If that is the scenario, then there is not a whole lot you can do. You have no way to troubleshoot it or alter it on your own, so you are pretty much stuck waiting for the person who developed it to fix it.

Consider contacting the provider.

One would hope that the developer of a trading algorithm is aware if their algorithm is not performing anymore. But this may not always be the case. The developer may have many algorithms to keep track of, or other projects, or they may just not be overly involved with forex at the moment.

You could try reaching out to them if their contact info is available. Be polite. Do not blame them or yell at them. Just tell them that it is not working the way it used to, and ask them to please look into it if they have the time. There is a chance they will appreciate the notification, and get to work on the issue.

If the algorithm is (supposedly) fixed, test it in demo mode.

Eventually, the developer of the algorithm may notify users that they have corrected the problem with an update. When that happens, you can try getting the new version of the algorithm, and testing it out again.

Always do this in demo mode. Hopefully, performance is back to what it used to be (or better). But there is no reason to risk real money until you have verified for yourself that this is the case.

When performance issues persist, check first to make sure it isn’t a problem on your end (i.e. slow execution by the broker, or a money management strategy that isn’t suited to the algorithm).

If you do verify there are still performance problems specifically with the algorithm, you can contact the creator again to report them.

If you confirm the algorithm works again, resume live trading.

You can switch to trading live with real money after you verify the algorithm works again in demo mode. Think about starting out risking a lower amount than you usually do, just to be on the safe side. Raise it again once you feel confident.

If the algorithm is not fixed, search for replacements.

If you are tired of waiting for the developer to fix the algorithm, you can look for a new one to use in its place.

There are tons of free and paid options out there. So, you should be able to find something that will work for you.

If this was your only algorithm, you may want to diversify going forwards. That way in the future the next time an algorithm stops performing as expected, you can at least keep relying on the others while you troubleshoot or replace the underperforming algorithm.

Algorithm Performance Declining is Frustrating, But There are Solutions

It can feel daunting when the trading algorithm you rely on stops performing the way you need. But that does not mean you are helpless. You either need to troubleshoot the algorithm, or replace it with a new one. The sooner you get to work on one of these solutions, the sooner you can get back to low-effort, algorithmic forex trading.

The post Steps to Take if a Forex Algorithm Starts Under-performing appeared first on Forex Penguin.

1. Only institutions have access to algorithmic trading.

2. Algorithmic trading performs perfectly.

3. You do not need to monitor algorithmic trading.

4. Algorithmic trading is too expensive or complicated for novices and retail traders.

Let’s go over these in more detail, so you understand myths versus facts about algorithmic trading.

Myth: Only institutions have access to algorithmic trading.

Fact: Retail traders can use algorithmic trading methods.

One of the first big misconceptions about algorithmic trading is the idea that it is something that only institutions and institutional traders have access to.

In actuality, algorithmic trading technology can be accessed or even developed by regular retail traders.

The reason a lot of people believe the myth is because it used to be true. But the technology is more affordable than it used to be, and more advanced thanks to the development of AI.

You can even use free AI software like ChatGPT to help you create your own trading algorithms.

You can also purchase or build AI trading robots that respond to changes in the market in real-time, adapting and learning so that they can perform in a wide range of conditions.

Myth: Algorithmic trading performs perfectly.

Fact: Algorithms do not deliver perfect results. There is no such thing as a perfect system, algorithm or bot.

For whatever reason, there are a lot of traders who believe that somewhere out there, the perfect algorithm or AI robot exists. They think of they could just get their hands on this holy grail, they would never lose a trade again.

There is no such thing as a holy grail of trading. There never has been and never will be. No matter how reliable your algorithm is, no matter how smart your AI might be, there are just too many factors that influence the markets that cannot be predicted in advance.

That does not mean that you should not use algorithmic trading. It just means that you need to be realistic about what it can and cannot do for you. A trading algorithm can help you win consistently if it is a good one, but it cannot make you invincible. Trading always carries risk. Past performance does not guarantee future outcomes. Manage your money accordingly, with care.

Myth: You do not need to monitor algorithmic trading.

Fact: You have to keep an eye on your algorithmic trading, because how algorithms perform can change over time.

As we just discussed, even if a trading algorithm has been effective in the past, there is always the possibility that it will cease to bring in reliable wins in the future.

It is true that your algorithm can execute trades without you watching it, or even being near your device. While that is very convenient, think about how it could backfire if something goes wrong with the algorithm. Instead of wining trades without effort, you will find yourself losing trades without effort. The worst part is, you might not have any idea it is happening.

The remedy is simply to make sure that you do keep monitoring what is happening in your trading account. That does not mean you have to go back to staring at the charts all day. But it does mean you need to regularly check in and see how things are going.

Depending on the frequency of your trades, we suggest regularly scheduled check ins. For example, they could be every day, every week, or every month.

Log all your wins, losses, and amounts in your spreadsheet, along with any additional notes about each trade.

Then, check your statistics to see if you are still roughly on target in terms of your win/loss ratio, average win and loss sizes, net profit, and so forth.

If you notice your algorithm starting to underperform in a significant way, you should consider pausing live trading and figuring out what is going on. That way, you do not lose money unnecessarily

Myth: Algorithmic trading is too expensive or complicated for novices and retail traders.

Fact: It is easy and affordable to get started with algorithmic trading.

You do not need to spend an arm and a leg buying trading algorithms. You will discover that many of them are available to purchase at a relatively low cost, and that many more are entirely free. Buying an algorithm or getting a free one involves almost no effort. You just choose the one you want, download it, and connect it to your trading platform.

You also have the option of creating an algorithm. Even if you do not have any programming skills, you may be able to get this done by using an AI chat app to assist you. It involves effort, but not as much as you might have pictured if you imagined having to do it all manually.

Remember, many AI chat apps are available for free. So, that is another way you can get an algorithm at no cost. Plus, it is one that is fully personalized, which is another nice benefit.

Learn More About Algorithmic Forex Trading

You now know some facts about algorithmic trading. We have dispelled common myths, laying the foundation for an understanding of what you can and cannot achieve using trading algorithms.

Forex trading algorithms cannot guarantee you wins, but they are simple and straightforward for you to put to good use, even if you are a novice. If you choose reliable algorithms and you keep an eye on your trading, you can use algorithms and AI effectively to help bring in profits. Continue reading our posts to learn more about algorithmic forex trading.

The post Myths About Algorithmic Trading appeared first on Forex Penguin.

What is Scalping?

Scalping is a form of trading takes place on the 1 and 5 minute charts. You rapidly enter and exit trades throughout the day. Some trades might last a few minutes. Others might be over in mere seconds.

Scalping can be very profitable. As you are working with a small timeframe, there may be numerous trade setups that show up each day, sometimes even just for one currency pair. This can be refreshing if you are tired of waiting around for setups on the daily charts.

Scalping brings a lot of challenges though. For one thing, you need a lot of trades in most cases, since you may frequently exit after just a few pips.

For another thing, trading on lower time frames exposes you to more whipsaws and volatility. You also need rapid reaction times.

Let’s discuss how algorithmic trading can help you to overcome some of these challenges and improve the results you get from scalping.

1. Execute trades more quickly.

Scalpers who are trading manually need to watch the charts for trade setups. When they spot one, they may need to make a decision whether or not to enter immediately. Even a few seconds of delay might cost them the opportunity.

Worse, if you enter too late, you could find yourself caught by a sudden move in the opposite direction, costing you money. Few things are as annoying as losing a trade you would have won if you had just been faster with your reflexes and decision-making.

Sometimes it isn’t even your reflexes that are the issue. Maybe you just took too long to enter your order details.

Algorithmic trading gets you around these problems by automating trading according to the algorithm’s rules.

With the algorithm firing off trades on your behalf, you don’t need to worry about missing out on setups or losing money because you were simply too slow. The algorithm can enter and exit almost instantly when opportunities appear.

2. Make more trades.

Not only can you enter and exit scalping trades more rapidly with the help of an automated trading robot, but you can also use algorithmic trading to trade more prolifically.

In the past, you might have only been able to manage a small number of scalping trades. You probably only opened one at a time manually. You also might sometimes have missed trades because you were still mentally recovering from the previous one when the next setup appeared.

But with algorithmic trading, you can enter a lot more trades. The algorithm can juggle multiple trades simultaneously or back-to-back with no problems. It will not become overwhelmed, or run out of time to submit orders. It also can trade 24 hours a day without tiring, so sleep and work don’t have to get in your way. Being able to make more trades means you can potentially build up your profits more quickly.

3. Reduce human error.

When you are trying to scalp, you have to fill out your orders quickly and submit them right away. Sometimes you may barely have time to think. Hopefully you are able to at least give everything a quick glance to double-check, but do not be surprised if you make some mistakes. Those mistakes can cost you money.

You can rely on algorithmic trading to reduce human error. Unlike you, a trading robot will not become distracted or fatigued. It will just follow the rules that it is programmed with, accurately filling out orders every time.

4. Decrease fatigue.

Not only do bots carrying out algorithmic trading not get fatigued, but algorithmic trading can also help you to be less fatigued.

Forex traders are notorious for getting sucked into cycles of poor life-work balance. A common scenario is to feel like you are “not doing enough”. Impatient to reach your goals, you try to hustle more, working day and night on your trading. But then you start sacrificing sleep and other important needs, causing you to underperform. You then get more desperate, and begin sacrificing even more.

Algorithmic trading helps you to avoid this cycle or end it. You no longer will feel the need to stay up all night staring at your charts, or give up on leisure time on your weekends. The algorithm will take care of it while you get your rest.

5. Get your emotions out of the picture.

When traders make emotional decisions, it can quickly result in losing a lot of money. Anyone might trade emotionally regardless of their trading methods, but scalpers may find themselves extra vulnerable to this tendency.

Emotions run high when you’re taking short-term trades. The rollercoaster of ups and downs can unfold in seconds. And since you’re in a rush and everything is happening so quickly, you may simply not have enough time to step back, regulate yourself, and make smarter decisions.

When you trade with an algorithm, you can remove your emotions from the situation. In fact, you do not even need to be watching your charts while you trade. Just let automation take care of it. If you are prone to panic selling, etc., you actually would be better off this way being less involved.

Algorithmic Trading Can Make Forex Scalping Easier and More Effective

Algorithmic trading can help you overcome a lot of the challenges of scalping, allowing you to place more trades more quickly with high accuracy. Continue exploring our posts to learn more about how you can get started with algorithmic trading.

The post Benefits of Algorithmic Trading for Scalping appeared first on Forex Penguin.

1. Rapid processing and execution for automated trading

AI is able to run rapid data analysis, incorporating quantitative and even qualitative data from numerous sources in real-time.

As a result, algorithmic trading with AI can now spot more opportunities more quickly, with rapid execution when setups are identified.

2. Faster and easier testing

If a trader wants to build an algorithmic trading robot, or even design a manual trading method, they can conduct much faster backtests using AI than they would have been able to carry out in the past.

As a result, it takes far less time and effort to home in on an effective trading strategy. This saves time building algorithms for auto-trading.

3. Troubleshooting and refinement

When all is going smoothly with auto-trading, things are pretty hands-off. You just check in regularly to make sure that your algorithm continues to deliver the same results you have come to rely on.

But even the best trading strategies need manual adjustments sometimes. That troubleshooting process can be slow, painstaking, and frustrating.

With AI, however, you may be able to speed up the process of figuring out what is going wrong, and fixing it.

You can tell ChatGPT what is going on, and share the decline in your results, along with any specific data you have been logging.

Ask ChatGPT to help you analyze your data and scenario, and to see if it can identify any specific patterns that might be accounting for the losses.

You can also ask it for direct recommendations for ways you could try changing your trading algorithm to boost your profits.

If it comes up with some ideas you think are worth trying, you can charge it with testing out those ideas for you.  

Hopefully after a few rounds of that process, the AI will help you identify how you can improve your algorithm and get it delivering strong results again.

4. Adaptation in real-time to the markets

One of the coolest things about AI for algorithmic trading is that AI can make real-time adaptations to the markets as they change.

For example, there are now trading apps out there powered by AI for various assets that do things like detect market regime changes in real-time, and automatically adjust risk parameters in response.

Alas, MT4 doesn’t yet offer the level of integration that would allow you to run this type of continuously-adapting AI bot. But we imagine that it may be possible in the future.

One thing we will say is that you should be cautious about how much you would allow such a bot to modify itself in real-time.

The example we just gave is a good approach. It lets the AI switch risk parameters automatically when market changes warrant it. There is a balance there between being adaptive, and remaining systematic.

But if you let the AI bot spontaneously make wholesale changes to its entire code, then you have no idea what you’ll end up with while you are away from your trading platform. Whatever it is, it will be untested, and probably will not perform as you would hope.

Challenges and Limitations

We have gone over some of the opportunities that AI is bringing to algorithmic forex trading. But we also should discuss some of its challenges and limitations.

• Data quality: You know the old saying about programming, “garbage in, garbage out.” Ultimately, AI is only as good as the data that goes into it. If you are feeding it subpar data and expecting it to work wonders, you will be disappointed. You need to be feeding it high quality data if you want high quality results.

• Contextual awareness: AI is able to identify patterns in existing information, and replicate them, and make predictions based on them. But it does not actually understand what it is analyzing or doing. As a result, it frequently displays a dire lack of awareness of real-world contexts. Only a sentient, human trader is able to bring that full contextual awareness to forex trading right now. It is critical to keep in mind that you cannot depend on your AI for this.

• Hallucinating: One of the consequences of a lack of contextual awareness is that AI still regularly hallucinates. It just makes up stuff whole-cloth, and may also sometimes ignore instructions, or distort them. Therefore, you cannot totally trust it. You have to keep a close eye on what it is doing, especially during times of volatility or choppy market conditions.

• Traders might lose touch: Automated trading in general puts traders at risk for relying too much on their algorithms, and forgetting to stay involved in their trading. That risk gets even higher when incorporating AI into aspects of trading, since AI likewise seems to tempt people to disconnect from manual processes. But it is important to stay involved. Otherwise, you might not notice right away if your algorithm needs adjusting.

Expect Continuing Changes Through AI

AI is transforming algorithmic trading by making it faster and easier to test strategies, build algorithms for trading, and troubleshoot when things go wrong. In scenarios where full integration is possible, AI bots can make real-time adjustments to algorithms in response to market changes.

AI is not evolving at the insanely rapid pace it was a couple years ago, but it is still improving pretty fast. So, expect to see more and more uses for it with respect to algorithmic forex trading over the years ahead.

The post How AI is Transforming Forex Algorithmic Trading appeared first on Forex Penguin.

This post will set about to address some of these questions and concerns. Let’s go over how AI will impact the future of trading. First, we will discuss some of the possible changes on the horizon. Then, we will talk about what will not change.

What Will Change

AI is already producing sweeping changes in the world of forex. Here is some of what is changing now, and what will continue to change as we move into an AI future.

Traders Will Learn Faster

The more advanced AI gets, the more rapidly newbie traders will be able to gain the knowledge and skills necessary for forex trading. An AI chatbot can be an excellent interactive learning tool, speeding up and streamlining the entire process.

Traders Will Get Increased Control While Placing Automated Trades

Something else that AI is already changing about how we trade is putting more power into the hands of traders to auto-trade without giving up control.

As it becomes even faster and easier to create custom trading bots with AI, we will be able to program bots with increasingly sophisticated, nuanced trading rules, and put them to work for us.

In the past, auto-trading for most traders meant putting faith in someone else’s system and program. It also meant not being able to do anything to repair or improve a trading bot that had stopped performing. But AI lets us rely on our own strategies and abilities while still reaping the time-saving benefits of automation.

Risk Management Will Be Simplified

Setting appropriate stake sizes and controlling overall risk exposure is a challenge for many forex traders, especially newbies. But with increasingly advanced AI, this is another aspect of trading that will become easier to automate successfully.

Automated risk management should help traders who struggle with discipline or anxiety to handle their money more wisely.

The Markets Will Respond

Most of the changes that AI will bring to the future of forex trading happen at the level of the individual trader. But it is important to remember that the markets will also change as a result of AI.

AI is going to continue to disrupt every industry. We are already seeing a lot of jobs being replaced with automation, while others are simply being changed by automation.

Even so, some AI technologies are just at the beginning of their development. For example, AI for writing is still not that sophisticated. But in five years or ten, who knows what it will be capable of?

There is no job that will be “safe” from automation, and no sector it will not completely transform. As a trader, you are going to see impacts in every market, including forex.

As the context of the markets changes, you will need to adjust your trading techniques so that they continue to remain effective.

There May Be New Regulations

At the time of this writing, AI is not very regulated. But there is almost no way we will not start seeing regulating of AI technology starting over the next few years.

It is hard to predict how that will impact your life as a forex trader. But it definitely will, however indirectly. So, that is just something else to be aware of as time unfolds.

What Won’t Change

While AI will bring a lot of changes to forex trading in the next few years, there are some things that will not change.

Forex Will Still Be Risky

No one is ever going to develop an AI trading bot that is so smart that it can predict the markets perfectly and bring in profits 100% of the time.

AI will never remove the risk inherent in trading. Uncertainty will continue to play a role in the markets, and you will have a possibility of losing any given trade that you make.

Trading Will Still Be Challenging

Because AI can never remove all of the risk from forex trading, it also can never get rid of all of the challenge. Forex trading has always been something that looks easy, because it is simple. But simple does not equal easy. AI can further simplify how you trade, and it may make it easier in some respects. But the vast majority of traders will still fail.

Traders Will Still Need to Put In Hard Work

Because AI will never make trading so easy that anyone could succeed effortlessly at it, effort will remain a requirement for success.

So, you will need to be ready to continue to work hard on forex trading. It is still going to be up to you to research, pick one or more systems, test them, and use them to trade profitably. AI will be able to assist you along the way, but not replace the role of your own judgment and ability to assess and adapt.

The post What AI Will and Won’t Change About Forex appeared first on Forex Penguin.

A lot of traders gravitate toward copy trading because it allows you to rely on another trader’s trading method. You do not even have to learn their method; you just replicate it in your own account.

Copy trading forex also helps traders to avoid pitfalls with their psychology. Those who have a hard time not exiting orders in a panic, chasing losses, etc., can benefit from automation.

But one thing you still have to manage on your own is your risk. There are a few different aspects to risk management with copy trading. These include position sizing as well as your overall approach in choosing traders to copy.

Without good risk management, even the most reliable trading methods can fail to make you profitable. So, it is critical to get it right. Here are some tips to help you out.

1. Research carefully

Effective risk management when copy trading starts with researching the traders you are thinking about copying in-depth.

You can start by checking their ratings, if your broker provides them. Once you find some traders with solid ratings, take a look at their trade histories.

Be sure to note not just how they have been doing recently, but also how they performed further back in the past, if the data is available to you.

Here are some questions to ask yourself:

• What is their win/loss ratio?
• What is the size of their average win? What is the size of their average loss?
• Are they setting fixed stops and targets, or trailing their stops? How is that impacting their results?
• How long is their longest losing streak?
• Is there enough data for you to comfortably say that they aretruly profitable, and have the potential to stay that way for the long term?

If, based on your analysis, you feel pretty confident that they are likely to stay profitable, then you can consider copying their trades.

2. Diversify

A lot of people start out by just copying one forex trader. It is easy to begin that way. Given how effortless it is to then watch the profits stream in, you might get lazy and not bother looking for more.

But it is important to diversify. If something goes wrong with that one trader, you will not be able to profit again until either they get their act together or you find someone else to copy.

So, don’t put all your eggs in one basket. Copy at least several traders. If one of them starts to fail, at least you have the others to fall back on.

You also might want to consider diversifying by following traders who are using very different strategies, or who are trading different assets.

3. Choose your position sizes wisely

Position sizing is one of the most important components of risk management. That is true no matter how you trade, and copy trading is no exception.

You should stick with the basic rule that we always recommend: risk no more than 2% of your account on any given trade.

Higher amounts of risk per trade can result in your losses adding up much more rapidly than you might expect. 2% should keep you in the game for a long time even if you hit a vicious losing streak.

Whatever you do, avoid progressive risk management “systems” like Martingale. These are not actually strategic at all. They just cause you to lose all your money incredibly quickly.

4. Make sure you are using stop losses

A stop loss is an order you can place at the same time you enter a trade. If price reaches your stop loss level, you will automatically exit the trade, ensuring that you suffer no further losses.

Stop losses are important safety nets. They prevent you from blowing through tons of money if a trade goes against you. They are especially essential if you are not there to actively monitor all of your open positions.

You should always have a stop loss. It is fine to trail your stop loss if that is what you want to do. But you should never be without one.

Setting a stop loss is our strong recommendation for any type of forex trading you do, be it copy trading or otherwise.

5. Track and analyze your performance

One more thing you can do to manage your risk when you are copy trading is to make sure you are checking in on your trading regularly. Do not just “set and forget,” however tempting that might be.

Keep a spreadsheet where you log the result of every trade, along with any additional information that might be useful. You should put in how much you won or lost on each as well.

Calculate running totals so you have stats like win/loss ratio, largest win, largest loss, longest losing streak, etc. That way, you will always be able to gauge whether you are still profitable or not. If you start experiencing a decline, you’ll be able to pause copying the trader that is causing the issues until they have sorted out whatever is going wrong on their end.

Managing Your Risk Will Help You Get the Most Out of Copy Trading

There is a lot about trading that involves luck, but there are some things that are well within your ability to control.

You can never guarantee you will win a trade, no matter how good the trader you are copying is.

But you can control how you mitigate the risks of losing. By following our suggestions above, you can manage your position sizing and overall approach to copy trading in a way that will help you to prevent or slow drawdown in your account.

The post Risk Management Tips for Forex Copy Traders appeared first on Forex Penguin.

This post will go over the differences between forex copy trading and mirror trading, along with the pros and cons of each. That way, you can make an informed decision about whether to use either or both in your trading.

What is Copy Trading?

Copy trading is a feature offered by forex brokers that allows you to duplicate the trades of other individual traders in your account.

Copy trading is normally automated. You pick the trader you want to copy, input how much to risk, and the trades are executed in your account in real-time as the trader you are copying takes them.

What is Mirror Trading?

Mirror trading also is automated. But instead of copying individual human traders, instead, you copy their strategies. An algorithmic system executes the trades, and there generally less manual control available.

We should note that sometimes we see people give different definitions of mirror trading. But as this is the most common one, it is the one we will be going with for this post.

Copy Trading Pros and Cons

Now that you know what copy trading and mirror trading are, let’s take a look at the advantages and drawbacks of each. We’ll begin with the pros and cons of copy trading.

Pros:

• Copy trading is easy once you have found traders to copy. You just tell the platform which traders you want to copy and how much you are willing to risk. The trades happen automatically (unless you choose to do them manually, and that option is supported).

• Anyone can do copy trading, even a beginner with relatively little knowledge of forex.

• When you copy specific trades, you know that you can expect the same results as the trader you are copying (which may not always be the case with mirror trading).

Cons:

• Copy trading encourages some traders to be lazy and not learn how to trade for themselves.

• As an automated method, copy trading does not give you a lot of control.

• You may sometimes need to replace traders you are copying, should they start trading poorly.

• As you can only copy exact trades that someone else is making, you may miss out on opportunities across other assets and timeframes.

Mirror Trading Pros and Cons

Having explored the pros and cons of copy trading, let’s now take a look at the advantages and disadvantages of mirror trading.

Pros:

• As with copy trading, mirror trading is an easy, low-effort approach to forex trading. After you decide which strategies you want to mirror, you can just kick back and watch. The trades are automatically executed.

• Like copy trading, mirror trading is an ideal method for beginners.

• Since you are mirroring a strategy rather than specific trades taken by individual traders, you can mirror that strategy across a broad range of assets and timeframes. How well this works depends on the strategy and how well it translates to different assets and timeframes.

Cons:

• In theory, the strategies you mirror may not always be effective across all assets in timeframes. So, depending on which ones they are executed on, you might see variations in how effective they are.

• As with copy trading, you do not have a ton of control over your trading when you are doing mirror trading, since it is automated.

• The other drawbacks of mirror trading are also similar to those with copy trading. Automating your trading like this is convenient, but it may discourage you from learning how to trade manually.

• If the strategies you are mirroring stop being effective, then you will have to find new ones to mirror. So, the method is not 100% passive (as is true with copy trading as well).

Copy Trading vs. Mirror Trading: Which is Right for You?

The best way to decide whether you should try copy trading or mirror trading is to read carefully through the pros and cons of each above, and think about which one you would prefer.

Both copy trading and mirror trading will save you a lot of time and effort with your day-to-day forex routine. Most of the time, you will just wait and see whether you win or lose trades as they are placed automatically.

If you want to exactly duplicate what a profitable trader is doing in their account and get the same results, then you should try copy trading.

But if you prefer to automate a strategy across more assets and timeframes, then mirror trading makes more sense.

You do not have to choose either copy trading or mirror trading alone. It is perfectly okay to do both. In fact, you may discover this is the best way to make use of all opportunities.

Regardless of whether you do copy trading, mirror trading, or both, make sure that you keep a close eye on your results.

If you are maintaining your profitability, then you do not need to do anything. But if you start noticing any reduction in your profitability, you may need to pause one or more of the strategies or traders you are mirroring or copying once you establish which ones are no longer producing profitable results.

At that point, you just need to search for some more traders to copy or strategies to mirror. You can then get back to being profitable again, and return to mirror trading and copy trading passively generating wins.

The post Copy Trading vs. Mirror Trading appeared first on Forex Penguin.

While copy trading is very popular, there are some myths and misconceptions surrounding it. Let’s dispel some of the most common myths about copy trading.

1. Copy trading will let you get rich quick.

Many traders believe that copy trading is their ticket to overnight riches. They think all they need to do is find a trader with a good track record, mirror them, and maybe use some leverage in their accounts to command higher lot sizes. They then think the cash will flood into their account while they kick back and watch.

If only it were that easy. But no, you are not going to get rich quick with copy trading (nor are you going to do so with forex at all). And if you manage your money poorly, you will probably just end up blowing your account quickly.

2. You do not need to know anything about forex to do copy trading.

Many people gravitate to copy trading because they think that it means they do not need to learn anything about how to trade at all to do it. They want to just open an account, make a deposit, pick some traders to copy, and hope it works, with zero knowledge of forex.

But no, this is not effective. In fact, if you try to do it this way, you will set yourself up for failure. You will be far better at choosing traders to copy and managing your copy trading if you have some starting knowledge of forex. It does not have to be a lot, but it needs to be enough to manage your money and make decisions about whether to continue copying specific traders or not.

3. You do not ever need to learn how to trade if you copy trade.

Another myth about copy trading is that you can just do it forever and never have to learn anything else about how to trade.

No one has ever been successful this way. Think about it. If it were that simple, why would anyone ever bother learning how to trade?

You do need to keep learning how to trade. In fact, ultimately, you will do best if copy trading is just one tool in your forex toolbox. Having your own strategies will empower you to far more profitability in the long run. 

A good approach is to use copy trading to give yourself a boost, but to rely on yourself first and foremost for success.

4. Only novices use copy trading.

A lot of people believe that copy trading is just a tool used by beginners to forex trading. While novices do comprise a large percentage of people who copy trade, they are by no means the only people who are doing it.

When copy trading is working, it is profitable. There is no reason that intermediate and advanced forex traders cannot also benefit from a profitable technique, even an easy one.

That is why copy trading is not just used by newbie traders. You will encounter traders at every skill level who copy trade. And you can keep doing it too long into your forex career. If it fits into your overall trading plan, then you should absolutely go for it.

5. Copy trading means giving up control. 

Another misconception about copy trading is that by engaging in it, you are giving up all control over your trading. While there is some truth to this, it is not completely true, as it is not really an “all or nothing” situation.

Copy trading usually is automated, though there are some platforms that support manual copy trades.

On one hand, yes, you probably will give up some degree of control when you place copy trades. You will not control the strategies used, nor even necessarily understand what they are or how they work. You will not be able to do any troubleshooting if the strategies stop working, since you will not be the one who knows or applies them.

On the other hand, you retain a lot of control too. You are the one who decides whether or not to keep copying a given trader, and how much of your money you will put on the line.

Start Forex Copy Trading

We have now dispelled some of the most common myths and misconceptions about forex copy trading.

Forex copy trading involves giving up partial control, but not total control like some traders think. While it is popular among novices, you now know that intermediate and advanced traders can utilize it as well. We also have discussed how copy trading, while powerful, is not a get-rich-quick scheme, nor will it get you out of having to learn about trading.

With all of that in mind, copy trading can be an effective tool when you use it properly. On our site, you can find recommended forex brokers that offer copy trading.

The post 5 Myths About Copy Trading appeared first on Forex Penguin.

Here are some amazing things ChatGPT or Gemini can do for you:

• Teach you the basics of forex trading.
• Act as a sounding board you can bounce ideas off of.
• Explain concepts that you find confusing in simpler ways.
• Help you program a customized trading bot. 
• Help you analyze your trading stats. 

To make the most out of AI, however, it is important to also be aware of its limitations. In this article, we are going to go over a few things that AI cannot do for you when you are trading forex.

1. Make sure what you are learning is up-to-date and accurate.

AI can give you information about forex—but there are a couple of caveats:

• The information will not be up-to-date (ChatGPT, for instance, has a database that only goes up to 2021).
• The information may or may not be factual (AIs still “hallucinate” false information).

That means that you will need to manually fact-check any information you are given by an AI while you are researching and learning about forex. You cannot rely on the AI to be accurate or think for you. Only you can assess whether what it is telling you is true.

2. Trade for you (directly).

Something else you cannot do is tell ChatGPT, “Please place forex trades on my behalf.” It is not programmed to do that. It has no idea what the current market conditions are, or what price is for any asset, nor how to place a trade.

But you can actually use it for trading indirectly. One of ChatGPT’s capabilities is to create code for you according to your instructions. Some amount of debugging may be necessary, but you should be able to get it to run if you are willing to put in the effort.

So, what you can do is tell it to build a trading bot for you. You will need to input a strategy (something else it cannot do for you), and explain what you need the bot to do. You then will be able to export the completed code to your trading platform to run. It can then trade for you.

Note that ChatGPT is not your only option, nor is it even necessarily your best. Gemini or Code Llama may both be better options for coding purposes.

3. Introduce you to all of the strategies out there.

Depending on what is in their databases, these chatbots might be able to give you rundowns of some basic forex strategies. But they are not comprehensive compendiums of all the forex trading systems ever developed.

If you want to discover as many forex strategies as possible, you are going to have to go searching for them yourself. You can find numerous strategies posted online, many of them for free on forex forums, coaching sites or blogs. You also can find additional strategies in books. 

This is the only way you are going to find the strategy that is best for you. It can be one of the slowest, most fatiguing parts of learning how to trade, but it will eventually pay off.

4. Test strategies for you.

One of the reasons it can be fatiguing to choose a forex system is because you have to test out all of the methods you are thinking about using, one by one, until you find one that you are profitable with on paper.

This is also how you learn what makes a perfect setup, what red flags to avoid in terms of market conditions, and so on.

There are some trading platforms that can now automate your backtests if you input your trading rules. But as of right now, this is not a task that ChatGPT can do for you.

Regardless, we recommend you actually conduct at least some of your backtests manually. Why? Because, as we mentioned before, this is not just about proving a method can work—it is about learning how to make it work by executing it correctly. 

If trading really were as simple as blindly applying a set of rules, we would see a lot more successful forex traders in the world.

The reality is that even rules that seem simple and straightforward are highly interpretive and subjective. Any two traders will likely trade the same method differently from one another. 

5. Manage your money for you.

You can ask ChatGPT or Gemini to explain the basics of forex money management to you, and they will probably do a pretty good job. We have tested it, and when we did, these chatbots gave reasonable advice, like that you should only risk 2% of your account per trade, and avoid using the Martingale system.

But giving you advice about managing your money is not the same thing as actually managing your money. That is something you will need to do on your own.

ChatGPT can tell you to only risk 2%, but only you can actually input that amount into your trading platform.

ChatGPT can tell you not to use Martingale, but only you can resist the temptation to try it.

ChatGPT can tell you not to add money to your account you need to pay bills, but only you can avoid doing that. 

In other words, “you can lead a horse to water, but you cannot force it to drink.” 

You and you alone can actually value your money, and choose to treat it accordingly. 

6. Put in the hard work and discipline for you. 

Speaking of that whole horse and water bromide, another thing that a chatbot cannot do is replace the discipline that you will need to have to succeed as a forex trader.

Using ChatGPT for the tasks it can perform will free up some of your time, and help you expend less energy. But trading is still hard work, and the only person who can ultimately do that hard work is you.

That said, if you are having a hard time sticking with your trading, you could try talking to ChatGPT about what seems to be holding you back. Who knows? It might just be able to offer you some insights that could end up helping you make a breakthrough. 

7. Prevent problem behavious while forex trading.

Finally, one more thing that ChatGPT cannot do is prevent problem behaviors, i.e. treating investing like gambling.

Hopefully, you do not have these problems right now, and you understand what you need to do to avoid developing them.

But if you do find yourself engaging in risky, compulsive trading, you will need to take some time off from trading, and seek out help and resources. 

Use ChatGPT as Intended

Now you have a stronger understanding of ChatGPT’s limitations. So long as you are willing to pull your own weight and take care of the tasks automation cannot, you can leverage this tool effectively while trading forex. 

The post 7 Forex Tasks ChatGPT Can’t Do For You appeared first on Forex Penguin.

The appeal of copying other more experienced forex traders is obvious, and you may wonder whether copy trading is the best and most efficient way to trade forex.

The short answer we will give you is “probably not.” But copy trading is still useful. In this post, we will give you a longer answer, going over the pros and cons of copy trading and how you can decide whether it is best for you.

Reasons Why Copy Trading May Be the Best Way to Trade Forex

First, let’s go over the arguments for why copy trading could be the best way to trade forex.

1. The easiest way to trade forex

Undoubtedly, there is no other approach to forex trading that requires less effort than copy trading. All you need to do is select traders to copy, input some basic rules like your trade amounts, and then let the platform place your trades automatically. That’s all.

2. The least time-consuming way to trade forex

With copy trading, you do not have to spend countless hours researching, testing strategies, searching for setups, and analyzing and troubleshooting your trading.

Ideally, you should take your time deciding which traders to copy. But even if you do that, it will not take you very long. And if you do not care all that much, you could get started in mere minutes.

3. A flexible way to trade forex

Copy trading gives you the ability to place trades during any time of day or night. You can trade while you are at home, on the go, at work, or doing anything in any location.

If you were trading manually, you would not necessarily have that freedom. You would need to trade only when you are physically available to do so.

Reasons Why Copy Trading May Not Be the Best Way to Trade Forex

Okay, now you have some strong reasons why copy trading may be the best way to trade forex. But there are also some solid rebuttals. Let’s talk about the reasons why copy trading may not be the ideal approach.

1. You give up the most control with copy trading

The only control you have with copy trading is which traders you are going to copy, how long you will copy them for, and what you will risk on your trades.

Beyond that, you are just taking everything on faith. You do not control the strategies or the setups. If something goes wrong, all you can do is stop copying that trader. You do not have the power to troubleshoot their problems and make them (and yourself) profitable again.

Some traders may be okay with that trade-off. But when you give up control, remember, you also sacrifice your own power for convenience. That is a pretty big limitation.

2. You learn the least with copy trading

Another of the reasons why copy trading is arguably one of the worst ways to trade is that you do not learn a lot from it. You might learn a little, but only what you can glean by watching the trades that are executed in your account.

You will not have access to the trader’s full strategy and rules as you are copying. You will not be able to effectively replicate it on your own as a result. And you will not be practicing creating strategies, improving them, troubleshooting them, or managing your emotions around tough decisions.

As a result, you will not improve as a forex trader yourself. You will just rely on other people.

3. People don’t successfully trade forex for a living by copy trading

Finally, have you ever met someone who has spent years successfully earning a living simply by clicking the “copy” button in their forex accounts? Probably not.

If you are serious about trading for a living, you are going to need to learn how to trade yourself at some point. You cannot copy traders forever and expect to make it, at least not for long.

The Bottom Line: You Need to Decide if Copy Trading is Best for You

Ultimately, whether copy trading is the “best” approach to trading forex or not comes down to your priorities and goals.

If your goals are to save time and effort, get right to trading, and keep things flexible and simple, then yes, copy trading may be one of the best ways for you to trade forex.

But if your goal is to become a profitable full-time forex trader over the long term, then copy trading is only one tool in your trading toolbox. The best way for you to trade will be using your own strategies so that you can maximize control and learning to become the best trader you can be.

The post Is Copy Trading the Best Way to Trade Forex? appeared first on Forex Penguin.