Are Forex robots effective for Forex trading?
Advances in technology have changed the way business is done. Increasing people are interested in the latest automated methods, incorporating artificial intelligence. Software, tools and devices are developed for implementing strategies based on rules, algo trading (interesting article about algo trading). The Forex market has also adopted the latest software and other technologies. The Forex robot is one tool developed which helps to automate trading, reducing the effort of the trader. This computer software will process the data available and executes the trade automatically if it meets criteria specified by the trader. So we talk about Automated trading vs manual trading, robots vs. humans ?
If you are a advanced trader, please read science article about automated trading.
Do Forex robots actually work?
Many traders would like to find out the effectiveness of the Forex robots. Data available indicates that Forex robots have the potential to increase the profits of the traders. However it is difficult for a trader to find or create the real robot. The number of different robots developed is in many thousands. The robot should be compatible with the present market conditions. The trader should modify the strategy for the robot when the market conditions change. One of the main reasons why Forex traders are opting for the automated trading offered by Forex robots is that they believe it will be more profitable compared to manual trading.
Finding a suitable robot is a major challenge. Though there are many Forex robots which are successful, they may have a bias caused by data mining,which affects their performance. Many traders prefer manual trading since there is no guarantee that trading with robots will be profitable. One of the mistakes of new Forex traders is that they think automated trading will boost their income immediately. They do not realize that they cannot depend on Forex robots, it is advisable to first develop strategies for trading manually. Traders can use Forex robots 24/7 since they help to decide whether a currency pair should be purchased or sold at a specified time.
Different functions of Forex trading robots
The Forex robots perform a wide range of functions which range from simple to extremely complex. Some of the functions are discussed below
Trade recognition
Using the criteria defined, the Forex robot can identify suitable trading opportunities. Relevant technical guidelines will be used to setup the robot for trading. An effective trading robot will help a trader to recognize trends and other opportunities to maximize the profit.
Placing orders
One of the most important factors in Forex trading is timing the purchase and sale of Forex properly. The Forex robots are designed to place orders on the Forex market. The robot helps to directly sell or buy any currency at a specific time. Based on the criteria specified by the trader, the Forex robot will place an order for buying or selling.
Position Management
It is possible to define the parameters for managing the position of the forex trader in the algorithm and programming code. The parameters will specify the profit margin required and also the stop loss levels. The trader will specify these parameters for automated trading using robots in the Forex market.
The Forex robots reduce the stress involved in manual trading since the trade is completed automatically based on the parameters set by the trader. Thus the Forex traders can also trade when asleep using robots.
Advantages of automated Forex trading using robots
The benefits of Forex traders are listed below
Greater accuracy
With automated Forex robots, signals will be recognized accurately, and orders will be placed at the precise level specified. This greatly reduces adverse effect of human errors on Forex trades
More extensive capability
The Forex robot can quickly scan a many Forex products to find suitable opportunities.
Reduced latency
For manual Forex trading, the trader may think twice before finalizing a position. Since the decision for Forex trading is made automatically when Forex robots are used, the delays related to the trade may be reduced.
Preventing emotions from affecting trading
One of the major problems faced by new traders as well as other traders are losses caused when trading decisions are taken based on emotions. Fear and greed often result in bad habits for traders like managing risks in a haphazard manner and trading more than necessary. Since Forex robots automate the trading, the human intervention is reduced, and emotional trading is also limited.
Disadvantages of automated Forex Trading using robots
Bugs
Computer bugs, glitches can adversely affect the automated trading using Forex robots, since the trade will not be completed
Lack of adaptability
The Forex market is affected by different factors and keeps changing. Unlike humans who can analyze to take corrective action, the forex robot is software, so it will remain unchanged, which is a major disadvantage.
Limited life span
Since the Forex market keeps evolved based on financial, political and other factors, most of the automated systems are effective only for a limited time duration. When Forex market conditions change, the Forex robots and software should also be upgraded to remain compatible.
Conclusion
The Forex robot is a tool which is developed to allow the traders, trade in the Forex market automatically even when they are busy or sleeping. An efficient Forex robot will be able to help the trader make a profit even when the market is volatile and reduce losses. Though thousands of different Forex robots are available, it is difficult for a trader to find the right robot.
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
