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The Truth About Forex Trading Robots
Written by: PaxForex analytics dept - Friday, 28 April 2017 0 comments
It is commonly observed that people who get involved in trading don't actually have much knowledge about the trading process so more and more people are choosing to use automated trading options so that they do not have to trade manually. Automated forex trading systems are available in the form of trading robots or expert advisors (EA). These are created by highly skilled and experienced professionals that write algorithms to analyze market trends and perform the trading process. They are chosen based on their level of knowledge and accomplishments to avoid panic or anxiety on the part of client traders.
Forex trading robots are programs that allow automation of the analytic and trading processes in the MetaTrader platform. They typically do this via you buying and then downloading a file onto your computer and then installing it into your MetaTrader trading platform as a plugin / add on. After this, the ‘magic’ (supposedly) happens; the software will determine when to buy and sell various currency pairs (usually you have to only use the pair or pairs suggested by the software seller), it will also typically include a risk management script of some type.
Unfortunately, in the world of forex trading systems and strategies, there are all sorts of people looking to sell you very expensive trading systems via very convincing sales pages that look and sound very professional. However, if you dig into them a little bit (literally any of them) and do some research, you will quickly find the systems are unsustainable
and they are just showing you an ‘ideal’ looking track record over a fixed period of time. These system-sellers aren’t typically explaining to you that you will need very large stop losses on many of these robot expert advisor trading systems, so large that one losing trade will wipe out of much of your account.
The first and obvious issue with forex robots is the fact that they have never been tested in actual market conditions. In almost all cases, they are tested on historic data and non-trade related problems such as connectivity issues. The second issue is the fact that by using a forex automatic trading robot, you are basically handing over the control of your finances to a machine that has no brain. It is programmed to run according to a set of rules at all times and has no ability to adapt itself to changing circumstances, regardless of the severity and importance of the changes in question. This is perhaps the most important disadvantage of using a robot in the forex market where change is the only constant.
The only kind of forex robot useful for you would be one which you could use to automate your own trading strategy, or one that you understand and are confident about, having examined the inner mechanism, and design of it. When you buy a forex automatic trading robot, you know close to nothing about why and how it performs, since even their creators don’t know why the particular combination on the basis of which the robot is operating is supposed to be creating good returns in the markets.