In forex, trading robots are a perfect solution to automate trading and make money in financial markets. However, your decision to switch to algo trading doesn’t mean that now you can just sit back and reap profits without putting in any real effort or not needing any skills.
In today’s article, we shall discuss how to use robots to make money.
1. Forex robots and their features
2. How to pick forex robot do
3. Algo trading: Hidden pitfalls
Algo trading implies the usage of special trading software to make trades in the stock exchange. Everything that traders typically do on their own (entering and exiting the positions, managing the risks, etc.) is done based on a specific algorithm followed by a robot.
What makes trading robots so beneficial is that they are not humans. Yet that can be a downside as well unless you know how to use them correctly.
With that said, trading robots are unable to adapt to the ever-changing market environment and so even the best ones need to be occasionally adjusted.
The first thing traders have to understand if they wish to use robots is that it’s not some magic spell that enables you to make money effortlessly without having to do anything at all. You can definitely take your trading to the next level using this solution but it doesn’t mean that you don’t need to acquire any basic trading skills and knowledge about the market.
1. Semi-automated robots. They provide market signals without actually making any trades on your behalf. Some of them imply an automated entry but you will still have to exit the position manually, and vice versa. E.g., Expert Advisor based on Real Market Volume indicators will simply search for entry signals.
2. Fully automated robots. They trade independently. However, there is one particular downside—they are unable to adapt to market changes and need to be adjusted by traders once in a while.
3. High-frequency robots. These trading robots place thousands of orders a day generating profits even in different stock exchanges.
Private traders typically use automated robots mentioned in the first two categories above. There are three main aspects you should pay attention to when choosing your trading Expert Advisors:
1. Long-term profitability statistics. Make sure to test out the robot using a demo version or a small demo account. The more trades you make with it (preferably hundreds and more), the clearer you will see the advantages and downsides of this specific Expert Advisor.
2. The strategy that lies at the heart of the algorithm. If you wish to use a robot that is based on someone else’s algorithm, you should figure out how it provides signals or how it opens/closes positions. The robot may need to be adjusted, and you have to understand how it can be done.
3. User manual explaining how to use robots, especially if you pick semi-automated EAs.
As it has been mentioned earlier, trading robots are not a way to make profits effortlessly but rather a chance to optimize your trading by eliminating the factor of emotions and using the advantages of artificial intelligence. However, you should keep in mind that:
Trading robots or the Expert Advisor is an excellent tool in the right hands. It can offset the effect of the human factor and make your path towards profit less bumpy.
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