While one of my algo-trading bots was putting on a show with the GBPUSD Forex pair yesterday, my other bot, The Fed, was showing its skill with the USDJPY pairs. In the attached images, you can see all of the trades it was involved with at same time.

Where a normal trader would have possibly given up rescuing the trade, the trading bots are deaf to any voices telling them to give up. When the bots get into a losing trade, they will scale deeper into the same FOREX pairs by buying bigger lot sizes. (This is the number to the right of the “Buy” column.) This technique creates a situation where the bot may have some big wins (on these trades, it made $1213.22), and they will also have a number of losses. (The losses total $809.23) While a $400+ win is great, it took many losing trades to turn it into a winner. Sometimes it doesn’t end quite as well..

Who or what is Martingale? It is the system the bot uses to turn the trades around. I described it in layman’s terms above. It allows the bot to turn a loser into a winner with the potential to get your account involved in excessive drawdown. (Any open trades in the account cause the equity in the account to be drawn down until the trade is closed.)

Before causing deeper confusion by trying to explain terms and concepts that an algo-bot trader has minimal need to know, might I again encourage you to explore a trading bot for yourself. The Fed is one of many great bots supported by Nurp. If you have other questions, please contact me.