There are different types of traders and each of them has their own way of working. However, all traders can be divided into two groups: those who prefer to trade manually and those who stick to automated trading, trying to use the best robots.
In this article we will tell you everything you need to know about trading robots, how they work, whether they are worth using at all, and much more. But first of all, let’s understand what a trading robot is?
Trading robot – what is it?
What is a trading robot ? Automated trading requires a lot of research to find software that will execute trades correctly.
If you want to take a break and let an automated device do the work for you, you might want to consider robots .
A trading robot is a computer program based on a set of trading signals that helps to determine whether to buy or sell a particular currency pair at a particular time.
Trading robots are available to traders 24/7 and can be easily purchased online. It is important to understand that there is no “holy grail” in trading systems. Also, trading bots do not have an autopilot that you can turn on, go to sleep, and make money.
So, if you’re wondering, “How do trading robots work?” or “Can I make money with a robot?”, this article will answer all these questions and more.
Robot : how the trading robot works
How does a robot work? Let’s figure out how to use a trading robot together.
FX traders want to use the best trading robots because they hope to make easy money on a crypto exchange without spending a lot of personal time on it. They hope to find a robot that works autonomously without requiring extra attention from the trader.
Some robot traders can scan many price charts in a way that a normal human cannot physically do. In addition, they are designed with certain parameters necessary to make trading decisions. Thanks to trading signals, they determine when it is advisable to trade or, conversely, not to trade.
That’s why they attract the interest of many traders: it seems that you can just turn them on, go about your business and earn a good profit, without devoting a single minute of time to trading.
The best financial robots offer options for finding profitable trades even in volatile markets when the current trend direction is unclear. They will follow the best trend to maximize profits and reduce the chances of possible losses.
Trading against the trend leads to losing trades, but trading against the trend is profitable regardless of the strategy or the trading robot you use.
However, keep in mind that most robots trade within a certain range. They close trades when they reach a certain number of pips inside a narrow range, at the calmest time in the market, setting targets of a few pips, and they may not even use a stop loss.
When an unexpected and strong breakout of the trading range occurs, the small profits that the robots were able to make are wiped out. Some robots, which many call the best trading robots, can close trades in the positive trend, but can make losses in a volatile currency market, so it is very important to find a good trend to follow.
The advantage of using a VPS is that the MT4 and MT5 platforms remain up and running at all times, so the automated software can continuously monitor the markets.
Also, remember that you have a great opportunity to use the analytics from our experts, which is published almost every trading day, completely free!
Robots: types of trading robots
Trading robots can be divided into several categories:
- Depending on the market:
- Trading robot
- Robot for trading binary options
- CFD trading robot
- Depending on the trading platform:
- MetaTrader Robots
- Other platforms
- Depending on the investment strategy:
- Scalping robots on
- Long-term trading robots
- Robots for binary options
Trading robots: how to choose the best one?
First, let’s answer a question that many people are interested in: How much does a robot cost at ?
The price of trading robots varies greatly and depends on the quality and complexity of the code: it starts at a few dollars and can go up to several thousand dollars. The price of the trading robots varies greatly, depending on their quality and complexity: they start at a few dollars and go up to several thousand dollars.
In this case, unfortunately, you can rely solely on feedback from other users and hope that the comments on the web are real comments from other traders.
This is the difficulty of buying a robot. An exception is when it is possible to test the robot before buying it. In this situation, the method of evaluating the robot will be the same as when testing free Expert Advisors downloaded from the Internet.
Downloading a free robot is by definition a simpler and more attractive option, but it is important to remember that many robots are over-optimized, so they tend to give good results only for a well-defined period of time.
Finding the right trading robot is not an easy task! Let’s take a look at the basic information you should consider when comparing different trading robots you’re interested in:
- Number of operations
In case your broker has commissions for opening and closing positions, the number of operations that the robot performs is important, because the more trades you will open, the more commissions you will have to pay.
Please note that Admiral Markets does not charge for entry or exit: a trading robot can open as many trades as it receives without any commission problems as we only take into consideration the spread.
- Consecutive profits and losses
It is important to know how many consecutive losing trades the trading robot can make, as well as how many winning positions it can create. Thus, you will know what to expect from the bot in general.
We remind you that historical data does not guarantee profits or losses in the future, but only serves as a reference.
- Average loss and average gain
Knowing the average amount of profit and loss allows you to calculate the ratio of potential risk/profit per position. If the ratio is greater than 1, then this result can be called good.
- Maximum loss and maximum gain
Knowing the maximum amount of profit and loss, you will understand the risk per transaction and be able to determine for yourself if you are willing to accept it.
- The level of successful transactions
This data will allow you to know at a glance which trades – profitable or unprofitable – the robot makes more often. A success rate of over 50% is a good start, so make sure that the risk/profit ratio per position corresponds to the success rate.
Here are 3 examples of winning statistics for the robot:
- 70% of profitable positions, but the ratio is 0.8
- 50% of profitable positions, but the ratio of 1.5
- 30% of profitable positions, but the ratio of 4
In these 3 configurations the robot makes money, although many parameters will also depend on the personality and psychology of the owner of this automatic trading robot.
Advantages of using a trading robot
It is worth noting that the advantage of automated trading on MetaTrader is that MT4 and MT5 have a huge database of free trading bots and vendors selling their robots.
MT4 or MT5 automated trading robots are written in the MQL4 or MQL5 programming language and have the following advantages:
- Speed of trading decisions, calculations, analysis
- Impartiality, no hesitation in decision-making
- Flexible trading hours – the robot will not get tired after hours of activity on the market unlike the trader
One of the main advantages of automatic trading is that the robot is not subject to emotions. The robot doesn’t regret closing an order or making a loss. And we know that the psychology of traders can sometimes greatly hinder making good trading decisions. This is especially true for new traders: often, when making several losing trades, they can get emotional and start opening orders that would be completely contrary to the essence of their trading strategy.
Disadvantages of trading robots
Naturally, trading robots have their disadvantages.
- In finance, past results are no guarantee of future results. Despite the fact that robots are capable of performing very complex tasks, and several at once, any trading bot is still incapable of creative thinking. They cannot imagine what might happen in the near future, because their functionality is limited by the way they were originally programmed and by past results in the market.
- Inability to make decisions in non-standard conditions. If you test your trading robot for a certain period of time and it works well in a trending market, you will be very happy with its results. If the market gets a little more volatile or turns in a certain range, your robot will start to make losses.
- Robots cannot replace human intelligence. It is true that calculations are easier to make with automated trading software, but no program can replace human intuition.
- In addition, the main advantage of robots – the absence of emotion – is also somewhat of a disadvantage, because the robot will not stop the trade, even when your deposit is almost nothing left.
How much does a trading robot bring to a trader?
A very important question for traders is “How profitable are trading robots?” One thing is clear – the developers of trading robots have the potential to become millionaires. They understand that people want to make a lot of money and they try to make trading robots seem like a panacea for them.
If the bots they sell can really make a lot of money by trading currencies, what’s the point of selling them to others and not using them in their accounts?
Can a $99 FX bot or even a free bot make hundreds or thousands of dollars every month? If it were possible, a legitimate question arises – would they really sell at such a low price?
If it were so easy to make money with these automated systems, no one would ever go to work. Although bots can make money for a limited period of time, after a while they start to become obsolete and lose money, and the money earned by the “best bot” may disappear before you can hold it in your hands.
Successful trading on the foreign exchange market is based on knowledge, skill and ability. If you look at what -bots are, it is clear that they lack this. Market conditions are constantly changing, and only an experienced Forex trader can accurately determine when to enter the market and when to stay away.
Nevertheless, if you have a good idea for a trading robot and maybe you even think it is absolutely (or almost) win-win, you can try to make it a reality by creating a robot yourself. You can find useful information on how you can create a trading robot in our article:
Trading robots and their effectiveness
Although automated trading software promises to make profitable trades, not all trading robots do what traders expect them to do.
Moreover, some federal governments consider robots to be a form of fraud. Likewise, you are unlikely to find an article promoting trading bots in Forbes, the Wall Street Journal or any other reputable news source.
In addition, even sellers of online trading robots try to raise the ratings of their robots by claiming that their competitors’ bots are fraudulent. Many advertise trading robots using fake reviews from people who allegedly made good money using these systems.
❗The truth is, however, that a large number of investors and traders have lost a lot of money using so-called “free” trading robots, which bring profit.
If you really want to know how effective a particular robot is, you should definitely read reviews and authoritative reviews on the Internet.
Although trading robots can scan millions of different charts in seconds, more often than not 90% of them give wrong information. This is understandable because trading bots are a type of artificial intelligence that lacks intuition.
Traders who use automated trading software should not rely entirely on it for their trading activities. Ultimately, trading requires human research and observation.
In addition, people can follow various economic conditions and financial news from all over the world, and perform fundamental analysis, unlike trading robots. -bots can only find positive trends and trading signals, but sometimes their work is adversely affected by unstable trends and false information.
In addition, hackers and viruses can also interfere with robots. In general, automatic trading software on e or robots is a great opportunity for their developers to make money, but not as much of a benefit to you as a trader .
We looked at aspects of automated trading with robots from a rational point of view. The conclusion we have reached is that instead of spending money on a robot, it is probably better to spend your time and money on learning how to trade.
Over time, you can become a professional trader who relies on your knowledge and experience rather than the algorithms and computer codes of someone who is not a trader.