Forex Robots: Are They Really Useful?
Forex trading supports different trading styles, Forex systems and Forex strategies, and is thus, highly versatile. A Forex market consists of traders of each level of proficiency and every trader has a different style of working. One of the features of this market is the division between traders who want to trade manually and those who want to use automated trading in the form of Forex Robots.
Automated trading needs a lot of research to identify the right software that performs trades correctly. Sitting back and enabling an automated device to implement your work might be a real temptation; this is where the roles of Forex robots are implemented. These are computer programs that are based on sets of Forex trading signals. These signals help to determine whether to sell or purchase a specific currency pair at a particular time.
Forex robots are available to traders for twenty hours throughout the week and can be bought easily over the internet. It is important to realise that there is no holy grail of trading systems, despite the kind they belong to.
How Do Forex Trading Robots Operate?
Traders want to use FX bots because they hope to earn easily from the Forex market without devoting a lot of personal time or doing anything manually. Traders who employ robots should find a lucrative currency pair as well as the perfect time-frame for trading to maximise their profits.
The best Forex robots offer a solution to find rewarding trades even in risky markets when the trending direction is not clear. Robots will pursue the best trend to increase profits and eliminate the chances of possible losses. Trading with the trend will enlarge profits, while going against it will gradually lead to losses, regardless of the robot or method employed to trade.
However, it is worth noting that the majority of fx bots trade within a specific range. They create a definite amount of pips inside the compact range, during the slowest time on the market; they also regularly fix several pip targets without utilising a stop-loss.
When a strong range and unanticipated breakout takes place, it wipes out the tiny profits that Forex robots have made. Some are promoted as the best fx bots can make profits in a positive trend but can lose money in an unstable Forex market. Therefore, the discovery of a good trend to follow is a crucial task.
If you are thinking of using Forex robots to help with your Forex virtual trading, you should be aware of both the pros and cons involved in trading in this manner.
Pros Of Using FX Bots
Emotions Can Be Controlled
There is no place for emotions in Forex trading and if you use fx bots, you are taking your emotions out of the equation. With these robots, orders will be carried out automatically, provided certain requirements have been met.
Unlike a human, an automated trading system would not question the decision. It can be a useful tool for those traders who become nervous while placing an order along with those who tend to sell and buy at every opportunity.
Discipline Can Be Maintained
Even in a dynamic market, the rules of an automated trading system will always stay the same. Emotional factors, such as the desire to squeeze maximum profit or fear of losing, are removed. Forex robots make sure discipline is preserved because the preset plan is pursued precisely.
Trading Rules Can Be Backtested Easily
Backtesting includes applying trading regulations to historical market data to ascertain whether they are viable. As a computer program cannot make any guesses regarding its actions, it needs to be told precisely what to do for every scenario. The regulations need to be exact and they require testing on past data before any actual money is risked in a trade. After this testing is done, the trading strategy can then be adjusted. This saves a lot of money and time when carrying out a system or strategy.
Consistency
Significant discipline is required to stay consistent when trading in the Forex market, especially if you have had a few losses in a row. Sadly, a 100% successful trading plan is just a myth,which is why it is impossible to get rid of losses completely.
Once faced with a loss, it is tempting not to invest in the next trade; however, it could prove to be a winning trade. Trading bots eliminate such decisions and provide you with consistency throughout your Forex trading activity.
Trading Can Be Diversified
If you use Forex robots, you can simultaneously use multiple trading accounts, which use different strategies. By doing this, you can spread the risk amongst a variety of instruments and protect against losing positions.
A computer is notably more efficient at this type of multitasking than humans and can execute orders within milliseconds. Trading bots also search for a variety of markets for Forex trading opportunities and control many different trades.
Improve Order Entry Speed
A computer responds very quickly to dynamic market conditions while a human will continue to think. A computer will immediately place an order as soon as the criteria are met. In the Forex market, even a delay of seconds can significantly affect the outcome of a trade, as financial markets move at lightning speed. If you miss out on a favourable opportunity because the human brain and fingers do not act quickly enough, it can be demoralising.
Cons Of Using FX Bots
Monitoring is still necessary
It might seem like a good idea to get on with your day and not worry about Forex trading at all once everything is left to the automated program, but it is highly unrealistic. There are various issues that can happen such as a power outage, loss of connection, system quirks, and computer crashes, which require monitoring. Failure to pick up unfamiliar situations can result in missing, completely incorrect, or duplicate orders.
It Might Not Be As Good In Reality
On paper, automated trading systems look outstanding and perfect. However, creators of such systems can manipulate facts to make their products look unbeatable. It is worth noting that due to the dynamic nature of the Forex trading market, computerised programs cannot be trusted.
Failure Of System Mechanics
Automated trading is a simple way of trading, but it cannot trade faultlessly. What happens if the connection to the internet is lost? What if a trade order gets stuck on the system and never reaches the server? What happens if the theory is not the same as the fact?
To prevent being caught out, you must start small, allowing the automated system to work and look for minor adjustments needed for an optimal operation.
The Effectiveness Of Robots
Although these robots promise to make lucrative trades, they are not exactly what traders expect them to be. In fact, a few federal governments regard them to be scams. You will not find any articles that promote them in the Wall Street Journal, Forbes, or other respectable news sources.
Robot merchants try to increase their products’ rank by claiming that their contemporaries’ robots are scams. Moreover, fake claims are advertised by people who have earned massively through the application of these systems. However, the truth is that a huge number of traders and investors have lost significant amounts of money using free automated systems that work. There have been certain circumstances in which entire accounts have been wiped out.
If you want to know how effective automated systems are, you should read reviews and authoritative testimonials online. These systems scan millions of charts within seconds, but 90% of the information turns out to be incorrect. This is justifiable because Forex robots are simply robots. Even though they can perform highly sophisticated tasks at once, every robot is deprived of creative thinking. They are incapable of imagining what can happen in the near future because their functionality is limited to how they were programmed initially, as well as their performance in the past.
The Bottom Line
If you are planning to use these robots, you should not depend on them fully to conduct your trading activity. Ultimately, trading requires a significant amount of observation and human research. Moreover, humans can actually follow up with distinct economic conditions and are capable of keeping up with the world’s financial news, unlike trading software. Additionally, viruses and hackers can affect these robots. Lags in internet connections also delay decision making.
These robots have the ability to study Forex charts thoroughly and quickly. Automated systems also lack emotions, which manipulate humans into not trading wisely and losing money while trading, as well as missing profitable opportunities.
You can try using robots in Forex trading but keep a check on how these robots function. You should avoid depending completely on decisions made by machines that function on programmed data. However, if you club your knowledge with the findings of these robots, you may end up earning a fortune.