Forex Robots and Automated Trading
Forex robots are automated systems that enter trade orders on behalf of the trader.
They are programmed to identify entry and exit positions and to execute orders by the application of algorithms and mathematical rules.
If you’re interested in trading currencies or other derivatives (though the vast majority of automated trading is designed to trade Forex) here are some things you must know before choosing your trading robot.
What a Forex Robot Does
The main purpose of a Forex robot is to make money trading on the Forex market without doing anything manually or having to sit at the computer.
As robots are programmed to making trade decisions, they decide when to trade and execute entry and exit orders accordingly.
The traders just have to find the ideal settings for the software: currency pair, time frame, size of each single trade and percentage of the capital to use at any given moment.
The commands executed by the robots are tested on a back-testing basis, using historical data, in an effort to optimize the results and, in some case, to make changes to the software algorithms and mathematical rules with respect to maximum drawdown, stop-loss orders and money management principles.
Robots are usually able to scan a significant number of charts and watching the price movements in all of them at the same time, which is something well beyond human capability.
By following the best trend, they can maximize their profits and possibly eliminate chances of taking losses.
As a basic rule, trading against the trend increases the chances of losses while trading with the trend maximizes profits, regardless of the trading system or software used to trade.
Some robots offer solutions to find profitable trades even in sideways market situations where the trend is not defined.
They make some pips trading inside the tight range during the slowest forex market time.
The biggest advantage of a Forex Robot
The main reason for people losing money in trading in financial markets (whether it be in Forex, Stocks, Futures, Options or other derivatives) is because the majority of the traders are not disciplined.
As they come across a few losing trades, they tend to trade outside of the planned strategy: instead of sticking to the trading system defined after weeks or even months of analysis and study, the undisciplined trader tends to overtrade or to erratically enter and exit positions in an attempt to recover the lost money and guess what… they lose even more money.
The greatest advantage of the trading robot is to follow the rules of trading strategy set out in the software itself without being influenced by the psychology of the human trader.
TradingMatica promotes only robots and trading software which are verified by third parties
The main sites verifying trading the performance of the trading robots and software are www.myfxbook.com, www.fxblue.com and mt4live.com.
In particular MyFxBook performs two verifications: one to determine if the performance are truthful, and one to determine the trader identity, or better that the trader is not using the Metatrader credentials of another trader.
First check: the track record is verified after comparing the data to data coming directly from the broker using an investor password
As performance can be easily manipulated with MetaTrader accounts, this verification system automatically checks the trading record and eliminates any discrepancies, restoring missing data and recalculating the performance. This check is performed by MyFxBook using the MetaTrader investor read-only password supplied to MyFxBook by the trader, which results in MyFxBook system connecting directly to the broker several times a day to verify the trading results.
Second check: Trading privileges are verified when the trader opens a pending order with a key provided by Myfxbook or the investor password is changed to a password provided by Myfxbook .
In order to prevent users from publishing trading activity which is not theirs by using another investor's password, this second verification system ensures that the declared trader is actively trading the account and not using someone else's password.
Similarly, the site Fx Blue says "You need to register with FX Blue Live. You then either download and install a publisher app for your trading platform, or - for MT4 or cTrader - you can set up account sync where we collect your trading results from the broker." and "We are not prepared to publish results on the site which might be entirely fictitious."
The site MT4Live.com main focus is to "Share Your MT4 Statements Live with Your Friends and Customers", so we can determine that only truthful results coming from actual statements are shared.
Advantages of using Forex robot instead of manual trading
Possibility to trade all day long, even in the night
They never get tired, so always work in full awareness. It allows you to work even when you are sleeping or busy, giving you the chance of not missing good opportunities.
Higher leverage than trading stocks, options or futures (40, 80, 100, and even 1,000 times your deposit)
Trading in Forex makes it easier to short and long than with stocks or other financial instruments: if you want to short stocks you have to comply with the uptick rule, while in forex there is no such rule to follow.
The software never gets tired or inattentive and never loses focus on the market
The robot is not influenced by the emotions
Forex Robots don’t have fears and concerns.
This allows it to operate fast without change your mind during the investment: it will seem strange but being disrupted is the main cause of trading losses by manual traders.
Forex robot are always vigilant and in case not to lose lucidity!
Quality of the software and performance
The first disadvantage and probably the only one that really matters is the quality of the software and then the performance of the trading.
Does it make or lose money? And what if the robot constantly loses money?
In this situation, the more the software trades on your behalf in your account, the more it makes you lose money.
You probably can not fix it and then it would be better to stop it rather than to continue to operate it.
This is particularly true with Forex Robot available as free download.
Number of trades
Forex robots do not have emotions and do not double think before entering into a trade: when the entry conditions are met they execute the trade, no exceptions.
On one side this may generate a higher number of trades than in the manual trading, on the other side in following the rules of the software the robot reduces the risk of entering the bad trades and skipping the good ones.
Then also excessive operations should be considered a fake problem.
The connection must always be up and running, and this is especially true for automated robot software, but in general also in manual trading, depending more on the frequency of the trades rather than if the trading activity is made by a human or by a trading robot.
Is fundamental have a stable and reliable internet connection, this being true by the way for both automated and manual trading.
Installing the forex robot trading software on the hosting company servers is a perfect solution to minimize this risk.
Hhowever, hosting services may also have temporary problems (for example hacker attacks), nevertheless this solution is to be preferred to the solution of keeping the home PC constantly switched on.
Beware of the Free download robots
The reason could be that the only purpose is to have you open the account and to get the cpa from the broker.