All about the Forex Trading Robots and How They Work
Forex trading is gaining more popularity and is versatile because of the various trading styles, systems, and a plethora of forex strategies involved. There’re multiple traders in the forex market with different levels of proficiency, and each of them has numerous ways of working. Typically, traders are split into two, manual traders or automated traders.
Trading forex is sometimes tempting that you may want to sit back and then let an automated device or a pro do the work on your behalf.
That’s the reason for the popularity of robots.
Basically, robots, as well as other automated software, show a lot of promise to traders of making massive profits with only a little or even no effort from their part. That’s why automated forex trading robots are conventional in the FX market.
But do automated trading robots really work? And if they do, how do they work?
What are Forex Robots?
First, let it be clear that a forex robot is not a mechanical or a physical robot which can sit in your desk in front of the computer and then make the trades for you.
Instead, it’s a software application that’s explicitly specialized for performing trades on the market via computer automation. The question is whether they do work or how they work.
Besides, why don’t people trade on their own?
What Does a Forex Robot Do?
Having an automated device perform the work while you sit back and watch is a tempting aspect that most can’t afford to look down. Basically, the robots’ main goal is making profits for the traders automatically without their intervention.
The robot simply initiates as well as liquidates trades without the trader doing anything manually. They can be useful in that they find an optimum entry as well as exit points, calculate ideal position sizes, and then execute transactions as per the rules.
How Do Forex Robots Work?
Everything with the forex trading robots is based on technical analysis of the currency market rates and generally working in the same manner regardless of the robot trading system purchased.
Sell and buy signals are simply generated by the robots depending on the market conditions as well as the technical signals of the present and past exchange rate levels.
The outcome is mere that a robot generates the buy and sell signal after all market factors as well as trading conditions in the trading plan of the trader have been met.
They are also capable of scanning several charts in a manner that humans physically really can’t. The best robots suggest some solutions for finding profitable trades; even the markets are unstable. They simply follow the best trends to ensure high profits and likely eliminating potential losses.
The Best Forex Trading Robots
One thing is for sure, every system guarantees (rather we should say they claim) a remarkable service, but that’s not always the case. Owning the best robots puts you a yard to achieving success, and hence identifying the best software that suits your trading strategy is crucial.
First, download trial software and then perform the back-test on a personal trading platform and evaluate the profitability of the robot.
The best trading robot will have a free trial, and the developer gives a satisfaction guarantee of testing it yourself before committing funds.
Benefits of Automated Forex Robots
In forex trading, timing is almost everything, and it guarantees success. Therefore, a robot helps identify a traders’ entry and exit points. Besides, the system can be used to execute a trade depending on the pre-determined signals.
Also, trading robots allows for programmability. It makes changing the risk levels, profit levels, and other variable easy since technical parameters are relatively adjustable.
Moreover, trading robots help eliminate human emotional factor. Forex trading can get emotional, especially with beginners. However, automated software gets rid of all psychological pitfalls. Furthermore, they help to diversify the trades
Beware of Scams
Every trader thinks about minimizing risks at the same time maximize the profit, and the trading robots are the best in doing that. However, not all of the robots look what they seem to be. There’re a lot of scams out there.
So, how do you identify a scam?
First, avoid the forex robots which guarantee 100% success rate. Any guarantees of high success should raise the alarm. However, a system with a 70-80% win-loss ratio should be more realistic.
Secondly, keep off from those programs which don’t show data in the live trading accounts. Demo accounts help, but trying a robot for its effectiveness in a live account should be better as the data feed in demo accounts may sometimes be not accurate in trade execution.
Also, if the robot is so much advanced that it comes up with its own strategies, then probably it’s a scam as that’s not possible.
The Bottom Line
Trading robots doesn’t guarantee success, just like most things in life. Therefore, before making an investment decision, ensure you crosscheck information.
Robots use technical analysis and hence limited in accomplishments. You need some skills to use trading robots. Nevertheless, forex trading robots can be useful if chosen well.