Forex market is one of the biggest markets in the world, pooling millions of people around the world. Traders deploy a wide array of strategies to take advantage of price differences while trading various currency pairs in the $4 trillion market. In recent years, forex robots or Forex expert advisers have cropped up, taking the art of forex trading to another new level.
Before you begin to ask yourself questions, you are not the only one that gets chills when you hear of such a ridiculous amount of money thrown around in a single market. Interestingly, many, if not all, traders get the chills! And that affects the decision-making pattern of traders. As such, forex robots aim to remove the psychological factor in trading to enable traders to earn higher profits.
Besides automating the process of setting up trade positions, the trading software leverages trading signals to open and close trade positions. Notably, there are thousands of such software available over the internet, but some of them are swindlers. Many of the developers of such swindles promise a one-size-fits-all solution, which does not exist. This article provides a systematic guide to forex bots to help you to avoid swindles.
The use of forex robots in forex trading is in rapid expansion, even with close to 90% of trades volume leveraging them. Notably, the growth of ALGO trading has been brought about by the availability of higher computing powersand increased adoption of artificial intelligence. Besides, the bots increase the chances of minting higher profits from trades as well as reducing the risk to profit ratio of trade positions.
It is unsurprising, therefore, that you too might be interested in using the forex robots, if you are not using them already. Nevertheless, ALGO trading is not as easy as it may sound. Unfortunately, many people get it wrong when it comes to using forex robots because they do not take the time to understand them. Notably, this happens when you swallow online gimmicks without critical appraisal. If you have tasted the bitter side of ALGO trading by falling for online swindles, this article should redeem you. We will take you through every step of using forex, including a short introduction to the bots.
What is Forex Robot?
Contrary to perception, a forex robot is not a toy for navigating the forex market. Instead, it is an automated trading system that leverages various algorithms and strategies on the Mt4 trading platform to generate profits for traders.
By automating forex trading experience, forex robots open and close positions based on strategies integrated into them. For instance, they can open a trade when there is a moving average crossover. Likewise, they can open and close trades on studying support and resistance levels in charts.
How Forex Robots Work
Forex Robots come integrated with technical analysis tools and strategies for scanning the market. Likewise, they scan numerous charts in the forex market at a rate that no human can. Also, they come with parameters that allow them to make trade decisions. The parameters and technical indicators will enable them to go with trading signals for opening and closing trades.
Automated forex trading tools suggest solutions for trading, even the most unstable markets. Robots are ideal for trading the forex market as they follow the best trend for enlarged profits while sticking to the best risk management strategies.
However, it is essential to note that most automated FX trading tools trade within specific ranges. By focusing on ranges, the expert advisers can generate a particular amount of pips even in the slowest of markets.
Forex Robots Effectiveness
While all forex robots promise to make beneficial trades, that is not always the case. Just like any other programmed machine, forex expert advisers are also prone to errors that may lead to significant losses.
A high number of investors have lost a considerable amount of money on depending entirely on forex robots to trade the forex markets. Circumstances, where accounts have been wiped out completely, is not something out of the ordinary.
Likewise, forex robots have enabled some traders to generate a significant amount of money. It is possible to find a forex expert advisor that finds positive trends as well as trading signals, consequently allowing traders to benefit from price movement. Likewise, when it comes to automated trading, it is essential to find a forex robot that can guarantee consistent profits over a long period.
What To Consider When Choosing A Forex Robot
When it comes to selecting a forex robot in a pool of many, it is vital to go with one that matches your trading strategy. If you were a short-term trader looking for daily profits, then an expert adviser with scalping and day trading strategies would be ideal. Likewise, if you were a long-term trader, it would be wise to go with a forex robot with positional swing trading strategies.
It is also essential to go with a forex robot that comes with effective risk management strategies. Focusing only on a forex expert robot’s ability to generate profits is suicidal. It is important to also focus on a robot that knows what to do, to prevent the accumulation of losses.
Cost is also an important factor to consider when selecting a forex robot. The most expensive forex robot may not be the best, and the cheapest may not be the best. That said, it is important to strike a balance between cost and quality when it comes to selecting a forex robot.
While looking for a forex robot, it is also important to consider what other traders are saying about a given system. That way, you will be able to get insight into whether the tool works before spending your hard-earned money.
Step 1: Have a Clear Investment Goal
Before you commit your hard-earned money to forex trading or cryptocurrency trading, there must be an objective you want to achieve. Typically, investments are either long-term or short-term. Often, long-term investors hope to cash in on a trend that seems to yield higher returns after weeks of holding a position. On the contrary, short-term traders hope to capitalize on short price movements.
However, you could have other goals like to spend less time staring at charts and going through historical data for a particular currency or cryptocurrency pair. Another goal could be that you want to create an avenue for passive income. If these are your trading goals, then an expert advisor/trading robot is your thing.
Step 2: Do You Want Full Automation?
Forex robots enable you to automate the activities surrounding trading in the market. Typically, traders resort to automation when they have little time on hand to set up trades and to monitor them. Automation further seeks to earn traders’ income even when they are sleeping.
If you choose full automation, you will need to install a virtual private server (VPS) on which the trading platform will run. It is because your computer must be online all the time to allow the bot to enter and exit trade positions. Further, full automation attracts extra costs to acquire and install the VPS. However, you are free to do other things and leave the trading exercise to the bot once all is set.
A semi-automated approach is one where you oscillate between automated trading and manual trading. It is only possible if you can find time to trade, set up trades and to monitor the market. In manual trading, you can leverage the indicators available in the trading platform. While indicators might help you to stick to your plan, you are more exposed to the risk of losing money than when using expert advisors.
Step 3: The Best Timeframe for the Expert Advisor
Each developer builds specific strategies into the software. However, it is critical to realize that each strategy uses a certain timeframe. For example, the Martingale strategy may use the M1 timeline or even M5, depending on the preference of the developer.
When you acquire a forex bot, it is essential to understand these details so that you can adjust your charts accordingly. Also, different trading strategies aim for different timeframes. Therefore, failure to take note of these details is a sure step closer to collapse.
Step 4: Find Out If Your Broker Is Forex Robot Friendly
The forex market is vast, but traders cannot get access without using intermediaries called brokers. Notably, brokers pair demand and supply to ensure that the market is efficient. Before you decide to consider using bots in your trading activities, it is crucial to find out of your broker is friendly to algorithmic trading. This information will prevent you from making unnecessary blunders that might lead to a bad experience.
Step 5: Acquire Your Favorite Expert Advisor
Having ticked off all the items up to Step 4, you are now ready to acquire that expert advisor. It is upon you to scour the internet for reviews software backtest results find out the best bot that suits your needs. Nevertheless, it would help if you ascertained that the profit function of the software is positive. Also, the software must be easy to use.
Forex Robots Advantages
Forex robots take automated trading to another new level relieving traders the emotional burden that comes with volatile trading markets. Automated trading is also active than manual trading when dealing with fast-moving markets.
Forex robots also allow a trader to scan the market for trading opportunities 24 hours. No human can sit all day watching the screen in search of trading opportunities. A forex expert adviser would be able to scan the market even in odd hours and execute trades.
Unlike manual trading, where emotions are always a factor, forex robots rely on preset strategies to open and close traders.
Fast execution speeds are another reason why forex robots stand out. Forex robots make complex calculations within the shortest time and execute trades.
Forex Robots Disadvantages
It requires a lot of time and skill to be able to find the best forex robot able to guarantee consistent profits. Most forex robots in the market are purely scams that only eat people’s money.
Failure to settle on a forex robot with well-proven risk management strategies can result in a trading account being wiped out in a heartbeat.
Forex robots are ideal trading tools given their ability to execute trades devoid of emotions. Besides, they relieve traders of the burden of having to scan the market and carry out extensive research in search of trading opportunities.
However, it is essential to remember that they are not risk proof. Some forex expert advisers can cause more harm than good. For this reason, it is vital to have some trading experience and skills to be able to use forex robots effectively.