Forex robots have become a superior tool for account strategizing in the turbulent Forex Capital Market. Either offered as an additional advantage of professional accounts (usually VIP or Premium) or as independent tools which you can buy, they provide for better account management of many traders. The majority of market participants rely on the automated assistance of the Expert Advisors (as they are called).
What are Forex Robots?
Forex robots are automated systems developed by programmers, and they enter trade orders automatically instead of the trader. They operate based on trading signals which suggest whether to purchase or sell a particular currency pair at a specified time and price.
One of the main features of the Forex robot is that they lack human emotions. This characteristic can be beneficial but can also backfire.
The robot will probably make a more rational decision at a crucial moment whereby a trader, instead, would be emotionally influenced and could make the wrong move driven by intuition and following a gut feeling.
The robot does not act that way, of course. It works on the basis of pre-set thorough algorithmic calculations and acts accordingly.
On the other hand, between the time of setting the robot’s parameters and the time of buying/selling, major events could have turned the market upside down where a last-moment change of decision is required, calling for a quick action. In this situation, a human logic would better applied than a fixed robot.
This is a decision each trader has to make for themselves. The best, of course, would be to acquire the skills of self-discipline and emotional control which would help your case regarding trading decisions.
Always Look for the Best Forex Robots
As already said, if your broker does not offer Forex robot services, you can buy them independently online. It is highly recommended to buy top Forex robots which have a good reputation if you want efficient robot assistance. Namely, many brokers offer Forex robot signals for free, which can do more harm than good. You do not know who created and programmed these robots and if the suggestions are random or based on in-depth research and analysis.
Therefore, it is better to buy a decent Forex robot if you want professional help. If you are more of a casual trader, then, you should rather rely on your skills than the assistance of free robots.
To find a decent robot you can do an online research. In fact, there are many reviews on this topic including Forex robot performance tables. The table displays a list of robots of quality performance. They are ranked according to efficiency and effective performance.
Unfortunately, Forex robots can also be subject to fraud and scamming. Try to avoid robots with malfunctions and that are not on the highest technological level. On the other hand, you cannot know for sure how your robot will perform.
Solid and sound robots should possess the qualities mentioned here Pay attention to the many features that make a Forex robot worth the money.
Features of the Best Forex Robots
Usually, good Forex robots are developed by a team of experts, normally experienced traders. They are usually able to find the most likely trend direction for the next two days, and some of them even account for a 90% success rate in trades.
They operate by forming copies which open in the background of traders’ account wherefrom they decide on the best entry point.
Best Forex robots are subjected to a regular update in order to keep up with the fluctuating market conditions.
Thanks to today’s technology they are easy to download and install on your desktop. Most of them work with all currency pairs. They come with automatic settings, but you can adjust the parameters manually according to your preferences.
Performance and Affordability
Being computer based software, a Forex robot never gets tired and does not miss out on any single detail, that might slip to a human eye. Forex robots “watch” over the market for you and make decisions based on a set of mathematical, logical, and algorithmic rules.
Forex robots are fixed by nature, which means that they are stable and independent of the market conditions. This offers particular security to traders, as long as the market does not experience abrupt changes.
Good Forex robots do not need to be necessarily expensive; most of them are affordable and available at a reasonable price (a couple of hundreds of dollars).
Most Forex robot providers offer a User Guide for free as a part of the package. It contains detailed information on installation and usage of the robot.
One of the methods employed by Forex robots is to count on breakouts, which increases chances for profit. Breakout is defined as the price movement of a currency pair through a determined resistance level. It works in the following way: If the price surpasses the resistance level, the robot recommends to buy.
Risks of Using Forex Robots
Some of the top Forex robots exclude arbitrage, the grid system, or martingale.
Martingale refers to a progressive betting strategy (i.e. a sequence of losses can be earned back by a single winning trade, with a profit).
The grid system involves complicated money management conditions and employs multiple trades at once which increase the risk of error-making.
Arbitrage is a strategy involving fast action and is mostly used by retail Forex brokers (buying and selling different currency pairs to exploit any pricing inefficiency).
Forex auto-trading can be profitable. It is also recommended (with caution) to beginners who lack the experience, and they can give free hands to the experts behind Forex robots who will develop the strategies and make decisions instead of the inexperienced trader.
Nevertheless, Forex is a risky business, and there is no one who can guarantee 100% profit, not even the impeccable computerized Forex robots.
The Forex Robot Demo Account
Beginner traders with a Demo account should be aware that sometimes the hypothetical trading has nothing to do with real-life trading. Simulated trading cannot reflect the real market situation, and it is never the same when you have an investment to lose and when you simply rely on virtual money and play a game.
Disadvantages of Forex Robots
Even if there are good, solid, and above-average developed Forex robots, they still lack certain features. The lack of these features does not necessarily mean that Forex robots are not doing their job, but simply that certain aspects are limited.
First of all, these robots were never tested in real market conditions. It is well-known that hypothetical setting does not reflect the real situation.
Tests usually include historic data and issues that are not directly connected to trades, e.g. connection problems. Technology and software are sensitive in general, and there is nothing we can do about it. That means that in the event of a software crash even the best robot will not be of use to you.
As already mentioned, robots are fixed and pre-set and if, for example, you encounter a trade where for no obvious reason the spreads widen more than you wanted, there is nothing you can do about that. A precaution measure you could apply is to take good care of Stop Loss orders.
Sometimes it does not feel right to hand over your finances to a robotic decision maker. It is based on a set of pre-set rules and has no ability to adapt to changes, new circumstances and the environment. Given that change and movement in prices are the core principles of the market, the robots circumvent this important feature and lack the ability to adjust to the often changes. Nevertheless, let’s not forget that the robots are able to successfully complete trades based on the pre-set parameters.
It all comes down to making an individual decision, whether you believe in its performance or not. Another thing is that robots hinder your trading skills and can affect your skills development.
To Buy or not to Buy a Forex Robot?
Many newcomers in the market who lack adequate experience rush with their decision to buy Forex robots leaving all financial decisions to the Expert Advisors. This is not the right approach. Of course, the robots can assist a great deal, but traders also have to know how it works. They need to know and understand on what basis their robots make predictions, what are the parameters and various features, etc.
A good solution would be to have a robot you can automate and set your own parameters.
Buying a robot is always a risk, since no one, not even the robot developers can guarantee for sure how the robot will perform concerning successful predictions.
Still, ready-made robots are still more popular than creating own automated strategies (i.e. custom-made robots) because many traders lack skills and knowledge to make and customize these tools.
It is important to realize that these Expert Advisors do their part and can make successful trades, but yet again no one should expect the robot to be right every single time. Also, if employing an automated robot, look out for major changes that could affect your trades and investments.