Forex trading robots

forex trading with forex robots
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    In their work, traders can use not only their knowledge and skills, but also various kinds of computer programs: auxiliary services and scripts that can give recommendations and even act as an element that can independently open and close transactions. These auxiliary elements are called Forex robots. In this article I will tell you in more detail what it is, what they are and whether it is possible to receive income from them, as many people write about it nowadays.

    What are Forex robots?

    First, let’s find out what these Forex robots are. In simple terms, a Forex robot is an automated trading system or a piece of software capable of buying and selling currencies based on parameters pre-set by its developer and without their intervention. The program generates trading signals based on mathematical algorithms and technical indicators. This means that the entry to the Forex market, your exit and stop loss are predetermined. It may seem to a beginner that the trading process of the robot is completely automatic, however, if you look deeper into this issue, then this is far from the case. After selecting and connecting the robot to the platform, you need to configure it. Each such robot already has its own choice of settings, with the help of which the user themself “customizes” the robot for themself and their needs. Based on the trading result of the robot, they can be adjusted to get more profit. Therefore, it is impossible to call the process of Forex trading a robot completely independent from a person. Recently, trading programs have been upgraded to two main trading modes: robot mode and advisor mode. Although these concepts can be conditionally considered identical, how one mode differs from another will be discussed below.

    What kind of robots are there?

    The main difference between a trading robot and an adviser is the direct participation of the user in the final decision.

    The advisor mode involves semi-automatic trading. That is, the trading expert only gives recommendations for the implementation of the transaction, the trader, in turn, decides whether to use them or not.

    But the automatic mode of the robot involves autonomous trading at the “plug and forget” level and independent opening and closing of transactions without the participation of the trader (which also surely has its own certain disadvantages).

    Relying on the way they work with the participation of a person – automatic and semi-automatic, they can also be classified depending on the conditions of trade, namely:

    Automatic Forex robots working in a trend. The strategy of such a robot is built quite simply – on assumptions about the uptrend and downtrend.

    Robots working on a flat strategy. This type of robot is not entirely automatic. It trades in a limited price range, which in turn is determined by the support and resistance levels.

    Scalping robots. One of the most used types among all existing trading robots. They gained their popularity due to the high speed of trading and a large number of automatic execution of transactions. In most cases, this type of robot has both small take profits (percentage of profit from a completed transaction) and stop losses, bringing profit to the trader due to the number of positions .

    Multicurrency robots. These types of robots are one of the most strategically complex type of trading robots. The way they trade is based on the search for several currencies or currency pairs related to each other at once, and based on these data, they open the same position for currency pairs that have a direct connection, or, on the contrary, open for those that have an inverse correlation.

    Martingales. As the name implies, this type of exchange robots is based on the Martingale method. A strategy originally developed and used for gambling. And, as a result, this is one of the most risky strategies. The method is based on a certain order of actions, the bet did not enter, double, did not enter again, double again. The process must be carried out until the last bet covers the previous drawdowns.

    Averaging. Bots that work by averaging transactions. Conventionally, if the price goes negative from the initial point, exactly the same (unprofitable) trade is opened. That subsequently, when the price rolls back, the profit will grow, and the minus, on the contrary, will fall. This type of bots also cannot be called the most successful, because with illiterate use and non-compliance with the basic money management strategies, a sudden loss of a deposit follows.

    How to trade?

    If, nevertheless, you decide to use a robot in trading in the Forex market, then here are some tips on how to maximize your chances of successful trading:

    1. Do not expect any miracles from robots. As trivial as it may sound, robots are just robots. Practice shows that automated trading works best and most profitably in a narrow range. Whereas in the Forex market, trading also requires intuition and analytical skills. Robots are not able to use any element of creative thinking to try to predict what might happen in the future. They can only collect data of past results and, based on their analysis, already give a calculation. None of the human qualities are inherent in a soulless machine, and, therefore, it would be not the best solution to rely on a robot 100%. It would be wiser to take into account also changes in the international financial climate and economic development.

    2. Research. Also, you should not stop your choice on the first robot that comes across. Do your own analysis to make sure you’ve found a reliable and proven option. To avoid fraud and leaked deposits, choose a robot that has already been in the market for some time and has earned the trust of more experienced and knowledgeable traders. And yet, it is always important to keep in mind that you should not trust just anyone. You should not trust the Forex bots that appeared overnight with a lot of rave reviews, even if the developer bribes you with such goodies as a guaranteed return of funds. And even the fact that the robot has been tested does not give you a guarantee that it is suitable for the job. Many programmers give out a one-time successful backtest as a reason to use their robot, even if they have done hundreds of other backtests that have not shown them positive results.

    3. Do not act in a rush. Start trading smoothly, without overcharging, as if testing the bot for opportunities yourself. Be sure to study the instructions and the strategy of the robot in order to understand your strengths. Close trades manually whenever possible and choose the right leverage. If the robot provides a beta version, it is better to use it first to test your skills on it and hone your trading style.

    4. Customize the robot for you. Before you start trading Forex, do not be lazy and take the time to form a trading plan and try to stick to it in the future. Define risk tolerance levels and profit targets, customize the robot according to your personal preferences and financial expectations.

    5. Don’t let go of the robot. As it has been mentioned before, the bot cannot fully analyze external factors that affect the constantly changing conditions in the Forex market. Which in turn determines the need from time to time to keep an eye on the assistant and the trading activities carried out by him and, if necessary, adjust his parameters accordingly.

    Summarizing all that have been said above, I would like to say that sitting back and swaying in your chair, allowing the automatic system to execute trades and wait for stunning results, seems like a very tempting and pleasant idea. However, if everything happened this way in life, then the developers would simply earn on the profit of the robot, and not on its sale. Often times, the software responds to false price spikes or incorrect data that an ordinary trader might mistake for an anomaly. There are so many different variables in the market that need to be taken into account that no one, not even a robot, should rely solely on ordinary data to predict what will happen in the Forex market.

    Either way, a Forex bot can be a very handy and capable trading tool in the market. But, as a rule, it is a nominal label for the so-called “lazy trader” who does not want to burden themself with a large amount of work. If you are still interested in the automatic method of trading, then I recommend trying it out as soon as possible. Nowadays, if you don’t  have any specific knowledge in the field of programming, there is always the opportunity to hire a professional developer who, taking into account all your wishes and trading potential, might create your personal Forex robot. Nevertheless, the market of trading robots is developing and every day it improves more and more in analytics and data processing and becomes hundreds of times smarter than its previous versions, which inspires confidence in the stability of work and success on the exchange.

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