Forex robots manage in repetitive, technical analysis based forex trading analysis. Such aspects lend themselves well to automation. Profitable long-term FX trading is more than that, but forex robots (bots) or automated services can benefit.
However – regardless of their complexity and capabilities – forex robots do not offer a one-stop solution for instant profitable trading.
What are Forex Robots?
A forex robot is a specialized program / software, which generates trading signals through mathematical algorithms that use technical indicators.
Some FX robots simply send these signals to traders. Other people can act on them. It is the last variant that really deserves the name “robot”.
Having a piece of software do all the hard trading work for you must sound tempting. All you have to do is go about your life and make a profit when you feel like it.
That’s not how automated trading works. There are several peddlers of such systems out there, who would prefer that you think like that about Fx robots. However, on this page, we intend to discuss serious and viable automated trading systems. Such systems require constant tweaking and human oversight.
The real question is: do these FX robots work and how did they decide to replace you?
How Do Forex Robots Work?
Expert Advisors (EAs)
MetaQuotes’ MetaTrader 4 (MT4) is the “home” platform of forex robots called Expert Advisors (EAs).
The EA uses a variety of technical indicators and custom scripts to derive trading signals and act on them. Anyone can code EA directly through the trading platform. The programming language used for this purpose is MQL 4 (MetaQuotes Language v. 4).
There is a lively marketplace where traders and programmers buy and sell the best EAs.
The best forex robots are able to scan the number of immoral charts. Through the technical indicators they use, they then look for trading opportunities.
Once it identifies such opportunities, the robot can recommend them to traders. It can also act on it, opening positions according to a set of pre-programmed parameters.
Limits
During both stages of operation, the limitations of the robot / EA are very clear.
Experience has shown that automated trading only really works within tight confines. Also, the presence of well-defined trends is a big plus. Auto trading profits generally only amount to a few pips. With the right conditions, forex scalping robots can be quite successful.
Because of this drawback however, large price swings can wipe out all profits in a heartbeat.
Funnel markets and negative trends are the main enemies of profitable automated trading.
Therefore, it is important for the robot user to find the right direction and strength, before handing over the reins to the “brain” algorithm.
Does Automation Really Work?
It is not always easy or simple to make a working forex robot. Programmers put a lot of hours and a lot of effort into building such software. The amount of variables there are to adjust for makes it clear that this is no easy exercise.
With that, the idea of a free robot robot that works, quickly becomes ridiculous.
That said, the actual efficiency of a working forex robot is rather unimpressive. Furthermore, the authorities consider such automated traders to be an unreliable novelty and a fraud at worst.
That’s why you won’t find any serious FX publications promoting forex robots.
Trading Experience
The forex robot industry itself is not conducive to trust. Peddlers from various trading bots do their best to outwit their competitors. It’s a bit of a Wild West out there, and the winners are rarely the traders who buy forex robots.
The best way to find a working forex robot is to go through the feedback given by real users. Make sure you are dealing with genuine feedback. Forex robot creators have an uncanny knack for studying user reviews.
Genuine forex robots always require a lot of user input. What this means is that the ideal user is far from an uninitiated beginner. He needs to fully understand the market conditions in which his robot works. The bot is only supposed to take the repetitive workload off the user’s shoulders. It cannot be a “smarter” party.
If that’s what you’re expecting, you’ll be disappointed.
Besutan Robot Strategy – From You
You need to set up your FX robot to execute your vision correctly. Once you’ve achieved that, you need to keep an eye on the market / base, and the rest of the robot, constantly tweaking its settings. Shutting it down altogether and making a radically different approach is also often necessary.
Forex robots that compromise “fire and forget” deals are always scams. No one will sell a forex robot that is able to grab unter untold on autopilot, for a few dollars.
That sounds too good to be true and indeed: it is.
Bottom line: don’t expect much from your robot and know that you have to do a lot of work even during automated trading.
Release free forex robots. Ditto for deals that are too good to be true.
Advantages and disadvantages
The advantages of forex robots are clear. If you have a mechanically repetitive trading strategy, that actually works, you will be able to have your robot trade for you 24/7.
FX robots take the mechanical work out of the forex trading equation. They can’t help you.
They are unable to create their own strategies and therefore they are unable to adapt to changing market conditions.
Successful forex trading requires skill, intuition, analytical approach and knowledge. Forex robots do not have those properties.
All auto traders, even the best forex robots in the world, work based on technical analysis. By definition, technical analysis uses past data to try to draw conclusions about future price changes.
Historical Forex Data
Any broker will quickly tell you in the fine print: past data is not indicative of future performance.
As mentioned, the forex robot market is the original Wild West. The cast does not attract attention and there is no way to make sales.
One of the tricks that forex robot sellers seem to like to turn, is the process of choosing the best from a pool of hundreds or thousands. They then present the backtest as the result buyers of the “system” can expect.
So the FX robot you’re interested in is backtested … which probably doesn’t mean anything.
Forex Robot Scam
The forex robot industry is fertile ground for all kinds of scams. It has always been that way, and it will probably continue on the same path.
The semi-legitimate nature of the idea of an auto trader leaves a lot of room for shady scams.
How can you tell that a forex robot is a scam?
- – The seller offers it for free. No one is going to put work and time (maybe even money) into creating a robot to then offer it for free.
- – It guarantees profit. No one can guarantee anything when it comes to automated trading.
- – Robots are so advanced that they can come up with their own strategies. This is not possible.
- – It turns out that the robot works based on some advanced technology. This used to be the preferred scam scammer to withdraw on binary options automated trading scam day.
There are always gullible people out there, and fraudulent banks can fool at least some of them. - – The price of the robot is reasonable (for example in the range of $20-$100). This doesn’t make sense. No one will sell a forex robot that can afford that.
- – The seller claims that the robot is a long-term solution and forget it. Most of the working forex robots are scalpers, because automated trading tends to do very poorly over the long term.
The conclusion
Forex robots use technical analysis. As a result, they are very limited in what they can do.
To be able to use robots to your advantage, you may need to be a skilled trader, as well as a skilled programmer.
That said, there are legitimate automated trading solutions available. A functioning Forex robot however requires constant human involvement.
If you take a quick look at some forex robot forums, you will be able to tell which auto traders are legit. You’ll also see community members there discussing various settings for their FX robots.
This setup encapsulates the puzzle of automated trading. The source of the winning strategy is the trader. Forex robots can only reduce the mechanical workload. There is not much they can add to the profits beyond.