Best Binary Broker!
Perfect for beginners!
Free Demo Account! Free Trading Education!
Only for experienced traders!
Trading robots. Are they still relevant? What is automatic investment?
The evolution and development of trading in terms of process automation has spawned automated algorithms for trading and investing in assets – known in this professional environment as “Robots.” Today you can see quite a few such programs that promise stable, and most importantly, surprisingly profitable, results, and on top of that, trader participation is not even necessary. Of course, this is tempting primarily for beginners, but pros often also wish to automate their trading processes as much as possible. Robots for trading – the problems, their relevance, the best offers on the market, the conditions for profitable use, and also the best algorithms – these issues will be addressed in our article.
What are robots?
So, let’s first distinguish the different types of robots according to function and mode of providing trading signals. There are two types of automated algorithms on the financial market:
• Automatic – fully automated algorithms which follow the principles of trading for a particular trading strategy, as well as the rules for risk and capital management. This type of trading robot does not require the constant presence of the trader and conducts all its trading operations automatically.
• Semi-automatic – this type of automatic algorithm for trading is usually called trading signals. On the basis of effective trading systems, trading signals are generated that are then provided to the market participant, and the trader independently executes contracts based on them
• Bots – they are a relatively new technical tool for trading on financial markets. This technical service is a technological derivative of the classic robots that work on the Forex market. A standard principle is applied here – the bot automatically evaluates the market parameters and executes a trading position if all the conditions in its algorithm are met.
This mode of trading financial assets has a very big advantage – the trader does not need to sit behind the monitor and participate in the trade. Bots are a fairly lucrative way of trading, and they do not require specialized knowledge from the investor and they can work non-stop. But it is worth noting that bots can also provide negative trading results, because they cannot take into account all possible data, for now, only humans can do that. Among the effective bots available on the market, we will point to the following: Butter Bot, Bot-2, and Tradewave. If you have chosen to trade with a bot, then you already know that subscriptions cost money and in some cases, quite a bit of it.
And then a completely natural question arises: who are these altruists of the financial market who provide such opportunities for free or even for money? If the robot is really so phenomenal, then why sell it or provide free access to it? The answer is obvious – there is no reason! Against this background, we will try to consider the main problems of robots.
The problems with automated algorithms
Most experts in the financial trading industry would agree that if trading robots had artificial intelligence, they could become really indispensable tools on the market. However, automated trading programs cannot be trained, and this is the main problem. This is due to the often changing parameters of market fluctuations. Any trading system has a certain optimal mode for achieving the best possible result. If the strategy is used in market conditions that are not included or considered in its operational algorithm, then it will inevitably fail. When using a robot, where the trader does not control the money management parameters, this becomes a critical indicator that leads to losses that are critical to the amount of operational capital.
An additional problem with trading robots is how they are completely tied to a particular trading terminal. Many of you have probably seen specialized sites that have such offers as “Trading robot for free” or “Download trading robot,” and were very surprised that these algorithms work exclusively on the terminal of a certain company. Yes, there is a special feature of this market – each company offers its customers their own product with particular trading functionality. For this reason, trading robots can be considered a kind of bonus offer rather than a really viable product. Imagine that you’ve contacted a company whose main goal is not to make money on your trading turnover, but specifically from your trading account – what kind of trading robot do you think you’ll get?!
How to solve the problem of robots and are there really effective algorithms for automatic trading?
There is no doubt that there are robots on the market that can, under certain conditions, bring consistently high results. But they are available to a limited number of traders or are exclusively developed by professionals themselves.
To overcome the main issues concerning trading robots, it would first be necessary to conduct a painstaking audit of robot performance and effectiveness in different market conditions. In addition, we must be most skeptical about automatic algorithms that are provided directly by trading platforms and choose companies with the best possible reputations. But the most correct approach for the application of automatic programs would be to independently develop and use them ourselves. In this way, you would be able to clearly understand the principle of the algorithm and you would be able to influence its operation while in the process of trading. We can also recommend the algorithms developed for the Meta Trader 4 platform! First of all, you’ll be using an automatic program that is not tied to a specific terminal, which reduces the company’s impact on your results, and secondly, the MT 4 is a universal trading platform for robot use.
Best Binary Broker!
Perfect for beginners!
Free Demo Account! Free Trading Education!
Only for experienced traders!
Professionals and successful traders give beginners the following advice – use robots as an aid and constantly monitor the algorithm’s operation. The beauty of automated trading is the lack of psychological factors when executing contracts. The algorithm, after receiving its signal, immediately executes a position on the market without hesitation, while the trader, on the other hand, could still reason for a long time about whether the signal was correct or not, and thereby lose time and a favorable market position. But, at the same time, it is necessary to take into account trading factors that a robot cannot assess: the level of market volatility, the trading time, the news background, and changes to the rules of money management. By doing it this way, and with constant monitoring of the trading robot, the trader can achieve excellent results.
Is it worth using robots for trading?
Of course, it’s worth it! But under certain conditions and in specific trading situations. The optimal conditions for the operation of automatic algorithms can be characterized as follows:
• The universal trading platform Meta Trader 4 or a terminal from a trusted and safe company
• A quiet market during a period without any important news
• Continuous monitoring by the trader
• Accurate initial robot settings
• Auxiliary mode for applying the automatic algorithm
• Compliance of the robot with the trader’s trading parameters
With these conditions, a trading robot can provide results and help the trader obtain not only profit, but also growth in professionalism and trading experience.
Our article would not be complete if we did not offer you an alternative to automatic robots and this method of investing. Today, the alternative is classic trading strategies! Let’s try to understand their basic formats.
Types of trading systems
All the different trading strategies can be divided into two groups – those using various technical services and approaches to evaluation, and the use of certain market patterns. Systems can be of the following types:
1. Non-indicator strategies
2. Indicator strategies
This is a list of the most popular approaches that are most often offered on the internet.
This type of trading system is most often used by traders. It is quite logical – there’s a wide variety of technical indicators that can accurately and quickly evaluate data and generate forecasts, the most simple mode of use. These factors are fundamental to investors when choosing trading systems. Indicator systems always generate clearly formed signals with the highest possible level of efficiency.
Through the use of a variety of lines, histograms, and charts, automatic indicators help you determine trend vectors and possible points of price reversal, which is indispensable when executing a trading position. This type of trading system is used for trading during the day or for scalping – high-frequency trading on all price fluctuations
This approach to trading is also called trading on clean charts or on Price Action strategies. Such trading strategies are somewhat more complicated and require knowledge, as well as some experience trading on the exchange. However, traders who have mastered the use of non-indicator strategies show very good trading results. This type of trading tactic can be divided into the following types:
• Trend strategies – they work on cyclical patterns of price movement on the trend relative to certain levels. Quotes moving in a certain direction always, as it were, bounce off of certain levels – the support and resistance levels. Trend levels are very easy to determine on the liquidity chart using visual lines. This kind of strategy is used by many traders, both beginners and professionals. It is simple, understandable to all traders, and does not require serious knowledge of the investor. Moreover, in addition to its simplicity, it also has a high level of efficiency.
• Channel strategies – they are trading techniques that also use trend levels. In this mode, both trend lines are used at once, which shows a clear range in which the asset market is fluctuating. The advantage of channel systems is the possibility to trade in two directions at once. This type of system is very effective for working on flats at night.
• Trading on patterns – this is the most complex type of trading system. When building liquidity charts, Japanese candlesticks form a huge number of diverse combinations and patterns. After studying the influence of these patterns on market price movements, you get an extremely effective strategy. This method of analysis was developed a very long time ago, but modern traders have only known about it since the 1980s.
Trading on the news
We have now come to perhaps the most simple, yet effective approach to trading – trading on the news. This principle of trading is based on the reaction of the market to a particular publication of macroeconomic data or a political statement from a governing body. These drivers can influence the performance of certain sectors of the economy or the financial market as a whole. Here the main thing is to clearly monitor the news market background (it is not difficult to do with the help of special news services) and, depending on the data contained in the news publications, to quickly execute contracts.
This is undoubtedly a narrow list of trading strategies from all the different ones in existence. But when having in your arsenal a set of such systems, you can profit on any available asset and in any market situation, which, believe it or not, is not yet attainable for automatic robots.
After analyzing the work of robots and the relevance of their use in trading through the prism of having highly effective strategies available, we come to a rather controversial conclusion. On the one hand, we have every reason to automate trading and expect a stable result. On the other hand, the imperfections of robots and bots often leads to losses of capital. Undoubtedly, robots are effective and can be used, but this should be done with a high degree of monitoring by the trader.
“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”
Should You Use Automated Day Trading Software (EAs)?
Many people are lured to the markets by promises of easy money via day trading robots or expert advisors (EAs). An EA, or trading robot, is an automated trading program that runs on your computer and trades for you in your account. Selling robots and EAs online has become a huge business, but before you take you plunge there are things to consider.
There are certainly some benefits to automating a strategy, but there are also some drawbacks. The thing to keep in mind is that rarely is making a boatload of money easy. The promise of easy money is the oldest trading scam in the book. There is money to be made with trading robots and learning to automate strategies. Unfortunately, to this do effectively could actually take longer than simply learning how to trade manually, since a person needs to learn how to trade first, and then still learn how to automate the strategies via a programming language. And buying a program comes with loads of pitfalls, which will be discussed shortly.
Below, we look at all of this, and more, exploring the pros and cons of robotic trading and EAs.
What Is Automated or EA Software?
Automated trading software goes by a few different names, such as Expert Advisors (EAs), robotic trading, program trading, automated trading or black box trading.
Automated software is a program that runs on a computer and trades for the person running the program. Since it is a program, it will only take trades with parameters that align with what is written in the program. Creating a trading program requires extensive trading knowledge, as well as programming skills.
EAs are based on a trading strategy, so the strategy needs to be simple enough to be broken down into a series of rules that can be programmed. The more complex a strategy, the harder it will be to effectively program.
For people who buy trading software, they are completely dependent on the trading skills and programming skills of the person who wrote the program. This is a vulnerable position to be in.
Like most software, it will require an update from time to time. Market conditions change, and the trading software needs to be updated with it. If the software is not updated by someone who knows what they are doing, then it is quite likely the software will have a very short shelf life of profitability (if it was profitable, to begin with). EAs that are written by and maintained by experienced traders and programmers have the best chance at maintaining profitability over the long-term.
Beware the Sales Push
While a few EAs will work, and produce good returns, most will not. Less than 5 percent of people who attempt trading are successful at it, and that includes people who create and buy EAs. The odds of success are still very small even when using a trading robot.
The people who are successful with EAs constantly watch how their EA is performing, make adjustments as market conditions change and intervene when uncommon events occur (random events can occur that affect the programming in unexpected ways). Successful robotic traders, just like successful manual traders, put in the work required to create and maintain profitability.
This is quite different than the EAs sold online that describes a life of easy money and no work. all for $79.95! Once you buy an EA, rarely is there support and updates after the fact. Even if the creator of the EA is successful, that doesn’t mean someone who buys the EA will be. The creator may occasionally intervene, or turn the program off (during major news events, for example). Slight changes to when the program is run can change results dramatically. Unless the creator of the program is coaching you on how to do this or providing long-term updates and monitoring as market conditions change, it’s best to avoid getting sucked into the sales pitch.
Rarely Is Automated FULLY Automated
As alluded to above, successful robotic traders put in a lot of work to creating and maintaining their programs. The real work is maintaining the program. Someone can not simply flick a switch and watch the money roll in while doing nothing. This may work for a time, but market conditions change and unexpected events occur, which require intervention on the part of the trader.
If a person buys an EA, it is unlikely they will have the expertise to know when to intervene and when not to. Intervening, when not required, could turn a winning strategy into a losing one, just as not intervening when required could drain the trading account in a hurry.
In the Market Wizards book series by Jack Schwager, several successful automated traders are interviewed. All these traders were highly engaged with their strategies, and not just sitting back doing nothing. It is highly unlikely that a person can buy an EA and just leave it running while they sleep and work at another job. This approach may work, but only if they stay on top of the EAs performance, have the know-how to alter the program if market conditions change and know how and when to manually intervene when required.
Some people think that robotic trading takes the emotion out of trading. Unfortunately, this is not true. While the program doesn’t feel emotion, the person running the program does. People may feel tempted to intervene when they see the program losing money, but the program may still be functioning well (losing trades happen). Or they may intervene to take profits prematurely, manually overriding a trade when the person sees a profit they like. All these emotionally-driven actions could destroy an EAs profitable edge in the market.
Automated traded is rarely auto-pilot trading. It takes a lot of knowledge to be able to maintain an EA, and trading skills/psychological skills are still required to intervene when necessary, but not too much.
Automated Trading Systems: The Pros and Cons
What Is an Automated Trading System?
Automated trading systems — also referred to as mechanical trading systems, algorithmic trading, automated trading or system trading — allow traders to establish specific rules for both trade entries and exits that, once programmed, can be automatically executed via a computer. In fact, roughly 75% of shares traded on U.S. stock exchanges come from automatic trading systems.
Traders and investors can turn precise entry, exit, and money management rules into automated trading systems that allow computers to execute and monitor the trades. One of the biggest attractions of strategy automation is that it can take some of the emotion out of trading since trades are automatically placed once certain criteria are met.
The trade entry and exit rules can be based on simple conditions such as a moving average crossover or they can be complicated strategies that require a comprehensive understanding of the programming language specific to the user’s trading platform. They can also be based on the expertise of a qualified programmer.
Automated trading systems typically require the use of software linked to a direct access broker, and any specific rules must be written in that platform’s proprietary language. The TradeStation platform, for example, uses the EasyLanguage programming language. On the other hand, the NinjaTrader platform utilizes NinjaScript. The figure below shows an example of an automated strategy that triggered three trades during a trading session.
A five-minute chart of the ES contract with an automated strategy applied.
Establishing Trading “Rules”
Some trading platforms have strategy-building “wizards” that allow users to make selections from a list of commonly available technical indicators to build a set of rules that can then be automatically traded. The user could establish, for example, that a long position trade will be entered once the 50-day moving average crosses above the 200-day moving average on a five-minute chart of a particular trading instrument. Users can also input the type of order (market or limit, for instance) and when the trade will be triggered (for example, at the close of the bar or open of the next bar), or use the platform’s default inputs.
Many traders, however, choose to program their own custom indicators and strategies. They will often work closely with the programmer to develop the system. While this typically requires more effort than using the platform’s wizard, it allows a much greater degree of flexibility, and the results can be more rewarding. Just like anything else in the trading world, there is, unfortunately, no perfect investment strategy that will guarantee success.
Once the rules have been established, the computer can monitor the markets to find buy or sell opportunities based on the trading strategy’s specifications. Depending on the specific rules, as soon as a trade is entered, any orders for protective stop losses, trailing stops and profit targets will be automatically generated. In fast-moving markets, this instantaneous order entry can mean the difference between a small loss and a catastrophic loss in the event the trade moves against the trader.
Advantages of Automated Systems
There is a long list of advantages to having a computer monitor the markets for trading opportunities and execute the trades, including:
Automated trading systems minimize emotions throughout the trading process. By keeping emotions in check, traders typically have an easier time sticking to the plan. Since trade orders are executed automatically once the trade rules have been met, traders will not be able to hesitate or question the trade. In addition to helping traders who are afraid to “pull the trigger,” automated trading can curb those who are apt to overtrade — buying and selling at every perceived opportunity.
Backtesting applies trading rules to historical market data to determine the viability of the idea. When designing a system for automated trading, all rules need to be absolute, with no room for interpretation. The computer cannot make guesses and it has to be told exactly what to do. Traders can take these precise sets of rules and test them on historical data before risking money in live trading. Careful backtesting allows traders to evaluate and fine-tune a trading idea, and to determine the system’s expectancy – i.e., the average amount a trader can expect to win (or lose) per unit of risk.
Because trade rules are established and trade execution is performed automatically, discipline is preserved even in volatile markets. Discipline is often lost due to emotional factors such as fear of taking a loss, or the desire to eke out a little more profit from a trade. Automated trading helps ensure discipline is maintained because the trading plan will be followed exactly. In addition, “pilot error” is minimized. For instance, if an order to buy 100 shares will not be incorrectly entered as an order to sell 1,000 shares.
One of the biggest challenges in trading is to plan the trade and trade the plan. Even if a trading plan has the potential to be profitable, traders who ignore the rules are altering any expectancy the system would have had. There is no such thing as a trading plan that wins 100% of the time. After all, losses are a part of the game. But losses can be psychologically traumatizing, so a trader who has two or three losing trades in a row might decide to skip the next trade. If this next trade would have been a winner, the trader has already destroyed any expectancy the system had. Automated trading systems allow traders to achieve consistency by trading the plan.
Improving Order Entry Speed
Since computers respond immediately to changing market conditions, automated systems are able to generate orders as soon as trade criteria are met. Getting in or out of a trade a few seconds earlier can make a big difference in the trade’s outcome. As soon as a position is entered, all other orders are automatically generated, including protective stop losses and profit targets. Markets can move quickly, and it is demoralizing to have a trade reach the profit target or blow past a stop-loss level – before the orders can even be entered. An automated trading system prevents this from happening.
Automated trading systems permit the user to trade multiple accounts or various strategies at one time. This has the potential to spread risk over various instruments while creating a hedge against losing positions. What would be incredibly challenging for a human to accomplish is efficiently executed by a computer in milliseconds. The computer is able to scan for trading opportunities across a range of markets, generate orders and monitor trades.
Minimize emotional trading
Allows for backtesting
Preserves the trader’s discipline
Allows multiple accounts
Mechanical failures can happen
Requires the monitoring of functionality
Can perform poorly
Drawbacks of Automated Systems
Automated trading systems boast many advantages, but there are some downfalls and realities traders should be aware of.
The theory behind automated trading makes it seem simple: Set up the software, program the rules and watch it trade. In reality, automated trading is a sophisticated method of trading, yet not infallible. Depending on the trading platform, a trade order could reside on a computer, not a server. What that means is that if an internet connection is lost, an order might not be sent to the market. There could also be a discrepancy between the “theoretical trades” generated by the strategy and the order entry platform component that turns them into real trades. Most traders should expect a learning curve when using automated trading systems, and it is generally a good idea to start with small trade sizes while the process is refined.
Although it would be great to turn on the computer and leave for the day, automated trading systems do require monitoring. This is because of the potential for technology failures, such as connectivity issues, power losses or computer crashes, and to system quirks. It is possible for an automated trading system to experience anomalies that could result in errant orders, missing orders or duplicate orders. If the system is monitored, these events can be identified and resolved quickly.
Though not specific to automated trading systems, traders who employ backtesting techniques can create systems that look great on paper and perform terribly in a live market. Over-optimization refers to excessive curve-fitting that produces a trading plan unreliable in live trading. It is possible, for example, to tweak a strategy to achieve exceptional results on the historical data on which it was tested. Traders sometimes incorrectly assume a trading plan should have close to 100% profitable trades or should never experience a drawdown to be a viable plan. As such, parameters can be adjusted to create a “near perfect” plan — that completely fails as soon as it is applied to a live market.
Avoid the Scams
While you search for your preferred system, remember: If it sounds too good to be true, it probably is. There are a lot of scams going around. Some systems promise high profits all for a low price. So how do you tell whether a system is legitimate or fake? Here are a few basic tips:
- Scrutinize anything you’d have to pay for before you pay or lay down any money for a trading account and always ask questions. If you don’t, you may lose money in the end.
- Do your research and make sure you know everything about the system in question. And be sure to read the terms and conditions before you commit.
- Are there any testimonials you can read? Check third-party sites or even financial regulatory sites for reviews.
- Does the system come with a trial period? A lot of scam sites won’t offer you a trial.
Traders do have the option to run their automated trading systems through a server-based trading platform. These platforms frequently offer commercial strategies for sale so traders can design their own systems or the ability to host existing systems on the server-based platform. For a fee, the automated trading system can scan for, execute and monitor trades, with all orders residing on the server. This often results in potentially faster, more reliable order entries.
Before you Automate
The word “automation” may seem like it makes the task simpler, but there are definitely a few things you will need to keep in mind before you start using these systems.
Ask yourself if you should use an automated trading system. There are definitely promises of making money, but it can take longer than you may think. Will you be better off to trade manually? After all, these trading systems can be complex and if you don’t have the experience, you may lose out.
Know what you’re getting into and make sure you understand the ins and outs of the system. That means keeping your goals and your strategies simple before you turn to more complicated trading strategies.
And remember, there is no one-size-fits-all approach. You will need to figure out your preferred strategy, where you want to apply it and just how much you want to customize to your own personal situation. All of that, of course, goes along with your end goals
The Bottom Line
Although appealing for a variety of reasons, automated trading systems should not be considered a substitute for carefully executed trading. Technology failures can happen, and as such, these systems do require monitoring. Server-based platforms may provide a solution for traders wishing to minimize the risks of mechanical failures. Remember, you should have some trading experience and knowledge before you decide to use automated trading systems.
Admiral Markets Group consists of the following firms:
Admiral Markets Cyprus Ltd
Admiral Markets Pty Ltd
Admiral Markets UK Ltd
Reading time: 20 minutes
Wouldn’t it be great to have a robot trade on your behalf and earn guaranteed profits? It’s a dream of many to find the perfect computerised trading system for automated trading that guarantees profits, and requires little input from the trader themselves. Whilst there are many automated trading systems available, there are a few burning questions which need to be answered.
Exactly what is an automated trading system? What is automated trading in Forex? Is it possible to find a profitable system? What are the advantages and disadvantages of automated trading? Are auto systems safe? This article will answer these questions and much more!
What is an Automated Trading System?
An automated trading system is a program that allows traders to set rules for entering and exiting trades. Forex traders and investors can turn exact entry, exit, and money management rules into automated Forex trading systems that enable computers to perform and monitor trades. Once those rules are programmed, their computer can automatically carry out trades according to those rules.
Trade entry and exit rules can be based on simple conditions, like a Moving Average (MA) crossover, or they can be based on sophisticated strategies that demand a comprehensive understanding of the programming language that is specific to the user’s trading platform.
Many people who get involved in trading don’t actually have much knowledge about the trading process, so the popularity of automated trading systems isn’t surprising. They are also extremely accessible, as all that’s needed is a computer with an internet connection – you don’t even need a big investment to get started.
What are EAs and Forex robots?
Automated Forex trading systems are usually grouped into two categories – Expert Advisors, or EAs, and Forex robots.
EAs are created by highly skilled and experienced professionals who write algorithms to analyse market trends and to perform the trading process. They are chosen based on their level of knowledge and accomplishments, to avoid panic or anxiety on the part of client traders.
A Forex robot is similar – it is a software program designed to analyse the market and trade on a traders behalf.
The difference between the two is that EAs don’t actively make trades, while Forex robots do. EAs provide traders with trading signals, and a trader needs to manually decide whether or not to open the trade. Forex robots, on the other hand, can take care of the entire trading process automatically.
How Does Automated Trading Work in Forex?
Whether you are a beginner or an experienced trader, you can use automated currency trading systems to make real trading decisions on your behalf.
The best automated Forex trading systems are computer programs that have been designed to analyse market activity and currency price charts. The software helps by identifying key trading signals, including all sorts of spread discrepancies, price instability patterns, news that might affect transactions, and fluctuations in currencies, all while performing your trading activities, and to keep any losses to an absolute minimum.
The system will also locate the profitable currency pairs, and doing all of this before placing trades on them. If the software program can be set with user defined criteria (which satisfies all predetermined parameters) it can help in broadcasting a sell or buy alert, and can automatically perform the trading. This can also help in making transactions profitable.
Some automated trading platforms have strategy building ‘wizards’ that permit traders to make choices from a list of commonly accessible technical indicators, to build a set of rules that might then be automatically traded. For example, the trader could establish that a long trade will be entered as soon as the 50-day MA crosses above the 200-day MA, on a 5-minute chart of a specific trading instrument.
Users can also input the type of order (e.g market or limit) and precisely when the trade will be triggered (e.g at the open of the next bar or at the close of the bar), or they can exploit the platform’s default inputs. However, a lot of traders decide to program their own trading strategies and custom indicators, or they work closely with a programmer to design their automated trading system. Whilst this often requires more effort compared with using the platform’s wizard, it permits a much greater degree of flexibility, and the results can be considerably more rewarding.
If you are planning to program your own trading strategy, however, keep in mind that most automated trading systems require the application of software that is linked to a direct access broker, and any particular rules need to be written in that platform’s proprietary language. For instance, the most popular trading platforms: MetaTrader 4 and MetaTrader 5 use the MQL programming language, whilest the NinjaTrader platform uses the NinjaScript programming language.
As soon as the rules have been set, the computer can then monitor the markets in order to locate buy or sell opportunities based on the trading strategy, and it can then carry out auto trading. Once a trade is entered – depending on the specified rules – orders for protective stop losses, trailing stops, and also profit targets will be entered. Moreover, in fast-moving markets this immediate order entry can mean the distinction between a small loss, and a disastrous loss, in the event that a trade moves against the trader.
Can Forex robots and EAs lose?
While automated Forex systems can be a valuable tool, what must be remembered is that the majority of robots trade within a certain range. They make a particular amount of pips inside the tight range, during the slowest time on the Forex market, and they regularly set a few pip targets, and may not even use a stop-loss. They can be classed as successful, as they do tend to make profits in each trade, even if it is only a few.
When an unanticipated and strong range breakout occurs, it wipes out the small profits that they have made. Some robots which are promoted as the best Forex trading robots, can gain a profit in a positive trend, although they may lose money in a choppy FX market, so the discovery of a great trend to follow is an essential task.
However, where there is a risk of failure, a warning message is displayed, seeking approval before any transaction is made. The major advantage of a Forex auto trading system is that it is unemotional and consistent in its decisions.
Risk-Free Trading with Admiral Markets
Professional traders that choose Admiral Markets will be pleased to know that they can trade completely risk-free with a FREE demo trading account. Instead of heading straight to the live markets and putting your capital at risk, you can avoid the risk altogether and simply practice until you are ready to transition to live trading. Take control of your trading experience, click the banner below to open your FREE demo account today!
The Pros of Automated Trading and Automated Systems
Forex trading is considered as one of the premiere markets to trade, and an automated Forex trading system can help by instantly executing all Forex transactions. With the help of this software, the trader will only have to switch on the computer and let the software take care of placing trades.
So what are the benefits of these systems? Keep reading to find out.
1. Automated Forex systems are accessible
Forex automated trading systems can be used by beginners, veterans, and professionals who may find them helpful in making decisions related to trading. The software is available in different price ranges, and offers varying levels of sophistication. They also come with free demonstration models, so that users can familiarise themselves with the program before using it on their live trading account.
2. Automated systems eliminate the emotions of trading
One of the biggest attractions of strategy automation is that it can eliminate any negative or destructive emotions involved with trading, since trades are automatically placed as soon as certain criteria are met. In other words, your chosen trading software or Forex robot executes all trading processes, and opens and closes trades, while you sit back and relax.
By keeping emotions at bay, traders generally have an easier time sticking to their primary plan. As trade orders are automatically executed as soon as the trade rules have been met, traders will not have the chance to hesitate or question the trade. Additionally, automated trading can prevent overtrading (i.e. purchasing and selling at every perceived opportunity).
3. Automated systems allow you to backtest
The next advantage is the ability to backtest. Backtesting applies trading rules to historical market data in order to define the viability of the idea. When developing a system for automated trading, all rules have to be absolute, with no space for interpretation (i.e. a computer must do precisely what needs to be done without guessing).
In addition, traders can use these rules and test them on historical data prior to risking money in live trading sessions. Careful backtesting permits traders to evaluate and fine-tune a trading idea, as well as to identify the system’s expectancy – the average amount that an trader can anticipate to win (or even lose) per unit of risk.
4. Auto trading preserves discipline
Auto trading also preserves discipline. As trade rules are set and trade execution is carried out automatically, discipline is preserved even in volatile markets. Discipline is frequently lost due to emotional factors such as the fear of taking a loss, or the desire to gain a little more profit from a trade. Automated trading helps to make sure that discipline is retained, because the trading plan will be followed precisely. Additionally, pilot-error is diminished, for example, an order to purchase 100 lots will not be incorrectly entered as an order to sell 1,000 lots accordingly.
5. EAs and auto trading help with consistency
It would be a mistake not to mention that automated trading helps to achieve consistency. One of the biggest challenges in trading is to planning the next move. Even if a trading plan has the potential to be profitable enough, traders who ignore the rules alter any expectancy that the system would have actually had.
You should understand that there is no such thing as a trading plan that wins 100% of the time – losses are always a part of the game. However, losses can be psychologically harmful, so a trader who has two or three losing trades in a row may decide to skip the next trade. The next trade could have been a winner, so the trader has already ruined any expectancy the system had. Thus, automated systems enable traders to achieve consistency.
6. Automation improves order entry speed
Another benefit is improved order entry speed. As computers respond instantaneously to changing market conditions, automated systems are capable of generating orders once trade criteria are met. As a consequence, getting in or out of a trade a few seconds earlier can make a big difference in the trade’s outcome. Once a position is entered, all other orders are automatically created, including protective stop-losses and also profit targets.
You know that markets can move quickly, and it is demoralising to have a trade reach the profit target or to blow past a stop-loss level prior to the orders being entered.
7. Automated systems help diversify trading
Finally, the last advantage is that you can diversify trading. An automated trading platform allows the user to trade with multiple accounts, or different strategies simultaneously. In turn, this has the potential to spread risk over various instruments, while generating a hedge against losing positions. The software is able to scan for trading opportunities across a range of markets, to create orders, and is also able to monitor trades.
The Cons of Automated Trading and Automated Systems
Despite the advantages, you should know that automated trading is not deprived of certain disadvantages. The theory behind auto trading makes it seem rather simple: setup the software, program the rules, and watch it trade. However, the reality does not always reflect the anticipation. Automated trading is not infallible.
1. Automated systems rely on technology
Depending on the trading platform, a trade order could actually reside on a computer, and not a server. This implies that if your internet connection is lost, an order might not be sent to the market. There could also be a discrepancy between the so called hypothetical trades generated by the strategy, and the order entry platform component that turns them into real trades. The majority of traders should expect a learning curve while using automated trading systems, and it is a good idea to start with small trade sizes while the process is being refined.
2. Automated systems need to be monitored
The second con is monitoring. Though it would be magnificent to turn the computer on and leave for the day, automated trading systems require monitoring. This is due to the potential for mechanical failures, such as connectivity issues, computer crashes or power losses, and system quirks. It is possible for an auto trade system to experience anomalies that could result in missing orders, errant orders, or even duplicate orders. If the system is monitored, those events can be determined and resolved swiftly.
3. Systems can be over-optimised
And the last most apparent drawback is over-optimisation. Although not specific to auto trading systems, traders who employ backtesting techniques can produce systems that look great on paper, and perform terribly in a live market. Thereby, over-optimisation refers to excessive curve-fitting, which generates a trading plan that is unreliable in live trading.
For instance, it is possible to tweak a strategy to reach exceptional results based on the historical data on which it was tested. Trades occasionally incorrectly presume that a trading plan should have close to 100% profitable trades, or should never experience a drawdown in order to be a ‘feasible plan’. As such, established parameters can be adjusted to create a ‘near ideal’ plan, however, these will usually fail once applied to a live market.
Top 5 Questions About Automated Trading Systems
1. Is a Forex Automated Trading System Profitable?
Forex auto trading systems do not guarantee 100% profits, but they do make sure that you will benefit the most from market movements, whatever they may be. Auto Forex trading systems work in a very articulate and coherent way. Expert advisors are basically programs that comprise of the certain modules that investigate charts and figures, which move between a trader and a Forex broker.
These specially designed programs are extremely easy to handle and work with, so you don’t need any prior training in order to handle them. You just need to download the program, install it, and then adjust the settings on your computer. The automated currency trading system will then start working, and will start generating immediate results.
2. Are Forex Robots Effective?
Though FX robots promise to make beneficial trades, not all of them are what traders expect them to be.
Although they can scan millions of different charts within seconds, most often 90% will turn out incorrect information. This is understandable – because FX robots are just robots. Even though they are capable of performing highly sophisticated tasks, and many at once, every Forex robot or Forex robot free is still deprived of creative thinking. They cannot imagine what may take place in the near future, as their functionality is restricted to how they were initially programmed, as well as past performance.
For traders who use robots, they should not fully depend on it to conduct all of their trading activity. Ultimately, trading demands a considerable amount of human research and observation. Additionally, humans, and not trading software, can actually follow up with diverse economic conditions, and keep up with the news in the financial world. Forex robots, which are thought to be Forex robots that work, can solely find positive trends as well as trading signals, but occasionally their functionality is unfavourably affected by either jittery trends or false information.
Successful FX trading is based on knowledge, proficiency and skill. It involves analytical thinking, and something visual. When looking at what are Forex robots, it is clear that they cannot properly work in this manner. Market conditions tend to change all the time, and only an experienced Forex trader can distinguish between when to enter the market, or when to stay away.
3. What is the Best Automated Forex System?
Many automated Forex systems are offered for free, with extremely tempting service guarantees. However, these programs aren’t faultless. The disadvantage is that many of these systems are associated with scams. Nonetheless, the best automated Forex trading system can be safely attained if the privacy parameters programmed into the system are correctly set and checked.
It is hard to say what the best EA is, as in most cases, profitable EAs are difficult to access. There are many robots that used to be profitable. However, they are no longer relevant to current market conditions. For the most part, the best automated system to use is the one that you use for manual trading. Have it coded in MQL, this way you can substitute your own efforts with the script.
4. How Can You Get an Efficient EA?
As mentioned earlier, the best EA is the system that would do exactly what you would do, but automatically. This way you can save yourself a lot of time, and you would simply focus on the development of your trading strategy, without actually having to execute it. This is certainly a great time saver for most Forex traders.
If you are trading on a MT4 trading platform, you would need to compose your own trading robot using MQL programming language. It may be the case that you are a good trader, but have little or no programming knowledge. This isn’t a problem – there are plenty of superb, reputable MQL programmers available who will code your trading strategy and create an EA for you at a reasonable cost.
5. Are Automated Trading Systems a Scam?
The idea of having a program trade the market for you can sound too good to be true, which can lead many to wonder if it’s all a scam. In fact, some federal governments consider automated trading systems to be scams. In a similar way, you are not likely to find any article in Forbes, the Wall Street Journal, or any other respectable news source that promotes them.
What’s more, even online robot merchants try to move their robots in rank by claiming that their opponents’ ones are scams. A lot are advertised with false claims by people who have made serious money applying these systems. The truth however, is that a great number of investors and traders have lost a lot of money using so called ‘free’ Forex robots that work. There have even been circumstances in which whole accounts have been wiped out.
The biggest disadvantage of automated trading systems in the Forex market is that there are a lot of scams. The more you search for a perfect system, the higher the chance of seeing pages that promote EAs with 100% daily returns is. These pages display MetaTrader history showing how profitable the advisor is – and they usually come at a price. You can buy some software for as little as 25 USD, while some software can cost as much as 1,000 USD. Some websites will guarantee high profits, and may even offer money back guarantees. However, the vast majority of these types of EAs are unfortunately scams.
Think for yourself for a moment. Would you sell a highly profitable trading system if you could make profit with it on a managed account? Probably not. Would an efficient automated system be priced as low as 25 USD? Again, this is extremely unlikely.
Auto trading developers can potentially become millionaires. Smart designers are aware that people yearn to make a lot of money, and try to ensure that robot Forex trading appears to be one of the finest ways that they can achieve this. Nonetheless, they exploit this as a possibility to design a robot, or any other software (or even a DVD, webinar, seminar, e-book etc) to sell and prosper.
If the robots they sell could actually make a huge amount of money through trading the currencies, then what is the point in selling them to others and not utilising them on their own Forex accounts? The answer is logical – robots can barely make money for a Forex trader. Can a $99 FX robot or a free Forex robot really make hundreds or thousands of dollars every month? If it could, you have to ask yourself – would it really be sold for such a relatively low price?
It is important to be able to identify EA scams and not fall for them. Generally speaking, it is sensible to avoid anything that you have to pay for. You will not only lose the money on the software purchase, but if you are using the advisor on a live account, you could also lose your trading balance,
After reading this article, we hope you can now answer the following questions – what is automated trading? And what is automated Forex trading? Though automated trading may seem appealing for a variety of reasons, such systems should not be considered as a substitute for carefully executed trading.
Mechanical failures can and do occur – and systems require continual monitoring. Server-based platforms might provide a solution for traders who want to diminish the risks of mechanical failures. It is recommended by many professional traders to use a hybrid approach, consisting of manual and auto trading to achieve the best results.
If you would like to learn more about automated trading, why not read the following articles concerning automated trading in Forex?
Upgrade To MetaTrader 5 Supreme Edition
Admiral Markets offers professional traders the ability to trade with a custom, upgraded version of MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5 Supreme Edition!
About Admiral Markets
Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world’s most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
Forex Robot – Top 7 Trading Bot Providers for Beginners
A Forex robot is a computer software, specially designed to follow a specific set of trade signals and settings in determining the best prices at which you can buy or sell a currency pair. Forex robots were meant to help eliminate emotional and psychological biases when trading and also automate the forex industry.
Most of these are developed to work on the MetaTrader 4 platform as expert advisors where they use complex mathematical algorithms to monitor the markets, major news and announcements as well as price actions in determining the best points at which to enter or exit the market.
Ideally, they were meant to help both beginners and experienced international currency traders maximize their returns on investments and automate their trades fully or partially. But regardless of your level of exposure to the forex trade, you need to fully familiarize yourself with the type of forex robot and how it works before forking out cash for its acquisition or subscription.
On this Page:
Our Best Forex Signals Provider 2020
- Free Signals
- In operation for over 12 years
- Proven success rate of between 89.54 – 93%
What are the basic functions of a forex robot?
Timely trade entry and exit plays a key role in influencing the profitability of your trades. Your preferred forex trader should be accurate enough to identify the lowest price at which to enter a trade as well as the highest point at which to liquidate a position before the market tips. When deciding on a forex robot, always confirm its reliability and order execution speeds as these play a key role in determining its profitability.
Using a wave of complex or simplistic trade settings and clearly defined market analysis criteria to identify the most ideal trade entry or exit points. In most cases, such a robot employs a series of technical analysis tools and indicators like support and resistance levels, order flow, and RSI or MACD indicators in identifying the best trade points. It, therefore, pays to work with a forex robot that uses more than one indicator as this often reflects in the accuracy of its trades.
A forex robot will also be hard coded and equipped with several features that assist with the prompt management of open trades. These include such risk management tools as the hard stop loss, trailing stop loss, and take profit features that either protect your bottom line or ensure maximal profitability. Traders, especially the experienced forex enthusiasts are therefore better off keeping away from robots that don’t guarantee the effectiveness of their position management tools.
Why do you need a trading robot?
Passive incomes through trade automation:
Forex robots are fully automated and this translates to passive income generating streams. Some of the most sophisticated forex robots currently available will assume total control of the entire trading process, right from market analysis to exiting a position ensuring that you profit from the currency price actions 24/7.
You don’t need prior forex trading experience to succeed with a forex robot. When working with most of these fully automated trading robots, you only need to familiarize yourself with such basics as to how to lunch and stop the forex bot.
Helps perfect your trading strategy:
Winning forex strategies are developed over time by constantly evaluating your trade history and improving your areas of weakness as well as mastering your strengths. Most of these forex robots also give you access to their trading history and its analyses can help you improve on your strategies.
There are several factors that make a forex robot more profitable than an average trader. Key among them is their fast data processing and analysis that helps them score higher on accuracy than most traders. Secondly, the forex robot is faster in order execution – both trade entry and exit – ensuring that trades aren’t affected by tipping markets and currency pairs. More importantly, these robots can trade 24/7 ensuring that they take advantage of all the key price action in all the forex markets consistently. Not to mention that they help in keeping emotions in check.
What are the pros and cons of using a forex robot?
Speedy market analysis and order processing Helps you eliminate emotional and psychological biases from a trade Can be used to backtest different strategies before deciding on the best Forex robots can monitor and trade multiple currency pairs and trading accounts simultaneously more effectively A forex robot is immune to such human limitations as exhaustion and fatigue
Some forex robots can be quite expensive to acquire and too complicated to configure the most optimal settings High incidences of scams make it hard to identify the best bot Most forex robots run on your local machine and require it to be on and connected to the internet 24/7 for trade execution
Criteria used to come up with the best fx robots for 2020
Order execution speeds Number of currencies traded Security and reliability Risk management tools employed Trade accuracy Acquisition/subscription costs Reliability and expertise of its development team
Best forex robots for 2020
1. Learn2trade – Best Forex Automated Trading Signal Provider
Learn2trade, a London-based trading education Company, is one of the leading forex trading signal providers in the world whose signals have a success rate of between 89.54 – 93%. The company provides forex trading signals, online day trading courses, and support to independent financial traders of all kinds.
Lear2trade emphasize the importance of responsible risk management practices and the satisfaction of its clients. The company offers a 30 day, 100% money-back guarantee should traders feel that their automated system did not help them make any money. The team reports a success rate of 92% for a total of 2860 active members.
How to join Learn2trade
Step 1: Choose a package
Choose a package – Learn2trade offers three packages;
The 1-month package which costs $25 offering 3 premium signals per day with 89% success rate live messaging service, clear SL and TL also takes 30 seconds to sign up.
The 3-month package costs $55 and offers the same functionalities as the 1-month package.
The 6-month subscription package for $85. Limited slots are available and the cost is effective by saving $65 if done monthly. It offers 3 premium signals per day with an 89% success rate, live messaging service, clear SL and TL.
Step 2: Checkout
Once you chose your package, you will be transferred to the cart page. Click on the proceed to checkout button.
Step 3: Fill in your details
Fill in the registration form: billing details, phone, address, and your chosen payment method. You can complete your payment with a credit card, PayPal or cryptocurrencies.
- Proven success rate of between 89.54 – 93%
- Has been in operation for over 12 years
- Signal delivery via Telegram
- No CFD or forex trading service
- Does not provide trading signals on other markets
2. CryptoRocket – Best for private crypto and forex CFD trading
CryptoRocket is crypto, forex and CFD broker based in St. Vincent and the Grenadine. The broker uses Straight Through Processing (STP) execution which removes the conflict of interest between the broker and traders.
CryptoRocket offers a variety of currency pairs, stocks, indices, and cryptocurrencies for its clients to trade on through MetaTrader4, the most popular trading platform in the market. The broker stands out from other competitors in the industry due to its high leverage ratio of up to 1:500, the ability to deposit and withdrawal funds with Bitcoin, and its encrypted crypto wallet.
How to join CryptRocket:
Fill in the registration details on the CryptRocket home page. You will need to fill in your email address, and password in order to open a new trading account.
Choose one of the trading platforms: MetaTrader4 or MT4 WebTrader which does not require installation and it is a web-based trading platform.
Click on the ‘Make a Deposit’ button on the left side-menu and transfer funds through one of the payment methods: bitcoin, wire transfer or credit card.
- CryptoRocker uses Straight Through Processing (STP) execution
- Offers an encrypted wallet and a secured trading platform
- CryptRocket provides traders to deposit and withdraw funds with bitcoin
- The broker does not provide commodities trading
3. BinBotPro – Best for binary options investors
BinBot is a highly progressive and artificially intelligent trading algorithm, specially designed for binary options investors. The tool automates every aspect of forex trading starting with conducting market research, reading through graphs and charts trying to map and predict market movement as well as monitoring market trends to determine the ideal time to trade. With its relatively advanced analysis technology, BinBot Pro is optimized to gather market insights and metrics that can be used to project market movements. Today, the robot trader is already helping binary options investors achieve commendable accuracy and generate a continuous stream of profit, as much as 125%+ on invested amounts depending on the preferred individual bot trader.
How does it work?
BinBot sets itself apart from the competition because of its highly diversified mode of operation and support for several other indictor-specific mini-bots. Unlike when dealing with most other single forex robots whose settings and indicators you can keep adjusting, BinBot plays host to more than ten other bots that you can choose from during signup. Most of these can trade more than one currency pair while others are specially designed to only trade specific pairs. We are particularly drawn to this forex robot given that despite its full automation, you still have absolute control over such aspects of its operation as when it trades, the number of trades it can engage in simultaneously, and the amount of capital committed to every trade session
How to choose a BinBot mini-robot
Your choice of a forex trading robot should be influenced by such factors as the best trading sphere as well as your desired income level. Going through the BinBot list of forex robots, you will notice that they all display their potential returns on investment with some reporting as much as 125% return on investments. It can also be informed by your experience and previous exposure to forex trading. With this regard, you have the option of scrutinizing the trade settings and indicators for the different bots and vetting their viability or choosing to custom build your own trading robot using the tools availed by BinBot.
How to acquire BinBot forex robot:
Enter your registration details on the BinBot forex robot website – you only need the name and email address. It is also at this point that you choose your preferred trading robot and binary options trader.
*Note:BitBot and its wide range of forex trading mini-bots are available free of charge
Fund your account with a minimum of $250. While the forex trading robot is free, the binary options investment brokers you chose to work with require an initial deposit amount of $250 to activate the robot.
Launch the trading bot. Ideally, the bot goes live as soon you fund the account but you still have the option to turn it on and off and also decide of the number of trades it can execute simultaneously. By depositing these funds, regardless of the binary options broker of your choice, you unlock the dashboard from whence you can access all the forex robots activities such as the amount of capital to commit to a specific trade.
Best Binary Broker!
Perfect for beginners!
Free Demo Account! Free Trading Education!
Only for experienced traders!