The world of forex is fast-moving and volatile, with the habit of catching out traders who are ill-prepared. Following the market closely, using mechanisms such as stopping losses, and sticking to your strategy are all essential for successful forex trading.
There are many traders who, at one time or another, have wished for a second set of eyes or a helping hand; the good news is that wish can now be granted. Forex trading robots provide an efficient solution, using algorithmic trading based on market signals.
Fully integrated with popular platforms such as MetaTrader, could forex trading robots help deliver real success? Here’s a closer look at how they work.
What is a Forex trading Robot?
Describing it as a forex trading robot makes the tech sound almost human-like, an android who can sit alongside you, providing expert advice and companionship while you trade. Although the idea is cute, the reality is somewhat different.
A forex trading robot is also known as black-box trading or algorithmic trading and is an automated form of efficient forex trading in the US. You don’t need to be present for the program to work, as it uses a database of algorithms to scan the market for potential currency trades.
With a trading robot, you can either use the preset parameters or enter your own custom range. In theory, once it’s up and running, you can leave it to trade on your behalf with no intervention required.
Not all robots are created the same, so you’ll need to check the developer’s claims regarding speed, accuracy, and complexity.
The Benefits
One of the biggest hurdles that any trader has to overcome is their own mind. Ignoring the psychology of trading and sticking to the strategy can take a lot of discipline. Unfortunately, many traders find it hard, and once they hit the market, they chase losses or end up spending more than they wanted. These habits can be extremely hard to break and can lead to traders wiping out their accounts.
Using a trading robot instantly overcomes this difficulty. Able to execute trade instantly with no delay, a forex trading robot won’t be distracted by emotions. Once the parameters for trading have been entered, you can be sure that your instructions will be carried out precisely. Using a robot with a well-prepared strategy can give you confidence that you won’t veer off target.
The Disadvantages
Although there are some undeniable benefits to using a forex trading robot, it’s not the miracle solution that it may seem.
Before trusting your trading to an automated program, you’ll need to check that the algorithms are precise and trustworthy. Asking for an authenticated trading history is a good step and will help weed out the rogue providers whose software isn’t quite as good as they claim.
Some critics believe that robots can deliver a good performance in the short term but, over a longer period, fail to live up to expectations. This is because following trends and only operating within defined range limits the potential for trading.
If you decide to give trading robots a try, be prepared to pay a hefty fee. Cutting costs may leave you with a model which is cumbersome, slow, or simply not advanced enough to correctly interpret the market signals.
