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Writer's pictureFahad H

How To Choose Your Forex Robot? Calculating The Profit Factor Formula!

Automated buying and selling is the fad now. Many folks need to attempt buying and selling utilizing a foreign exchange robotic. There are many robots that at the moment are out there available in the market. Suppose, you’re additionally serious about attempting a robotic. How do you inform this robotic is the appropriate one for you?

There is not any level in buying and selling with an knowledgeable advisor even when it does make a revenue however dangers all of the capital in your account on every commerce. So how have you learnt which robotic will make you revenue constantly over the lengthy haul? There are many issues that you just want to try once you consider the efficiency of a fx robotic however probably the most necessary is the Profit Factor. Profit Factor is calculated utilizing the next formulation;

Profit Factor = (Profit-Commissions) / (Max Drawdown + Commissions)

Now, let’s focus on this Profit Factor Formula. If this quantity comes out to be larger than 1, you’ve found a great foreign exchange robotic that’s price attempting. And in case, the quantity is lower than 1, merely discard the robotic and search for a brand new one.

Always take a look at a foreign exchange robotic totally in your demo account earlier than risking you hard-earned cash with it. Let’s make it clear with a easy instance. Suppose, you take a look at an knowledgeable advisor in your demo account. Your preliminary deposit was $5,000. The robotic made a complete achieve of $2,500 and a complete lack of $2,000 with commissions of $60 and max drawdown of $600. Plugin these quantity within the above formulation. Profit is $500, commissions are $60 and max drawdown is $600.

You get a revenue issue of 0.66. Now, though the robotic was in web revenue once you examined it, this quantity is 0.66 which is lower than 1. This robotic won’t be good within the lengthy haul as it’s risking an excessive amount of. Simply discard it and seek for a brand new robotic that has a revenue issue of larger than 1. Good Luck!

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