Forex Auto Trading With Forex Robots & Expert Advisors
Automated trading is a relatively new concept in Forex trading, but it has been around in the financial markets for a very long time. In the early 1980s, several computer programs were being used extensively in the American stock exchanges, with automated trading programs slowly being adopted by major stock exchanges around the world. However, an increased influx of the internet and computing technologies into the mainstream trading market has led to an exponential rise in the use of automated trading programs to help traders to minimize the psychological impact of trading.
Forex trading is perhaps one of the most modern financial markets that witness a significant amount of auto trading through dedicated Forex robots. Auto trading, also known as algorithmic trading in some financial markets, is a trading process that uses automatic programs and trading systems, which opens and closes orders according to a particular set of pre-built trading conditions. Forex robots are primarily developed by leading analysts and expert programmers, who are responsible for coding different strategies into an automated system to open, manage, and close positions in the market with or without any human intervention. It is currently estimated that more than 85% of the trading volume in the global financial markets are performed by algorithmic trading systems.
Today, Forex auto trading is a huge business that sees a wide variety of automated programs being sold to traders from around the world. Although Forex robots are not considered to be illegal, certain countries and a handful of Forex brokers may frown upon the practice. It is not uncommon for automated trading strategies to be subjected to numerous restrictions that are designed to protect the markets from excessive market manipulation or high-frequency trading. Due to the absence of human emotions or empathy for the markets, Forex robots may trade without any remorse, which might affect the overall integrity of the markets.
Nevertheless, automated Forex bots may be suitable for traders that are unable to find a successful trading strategy, especially for those that fail to exercise control over their emotions and other psychological factors. Forex robots are also designed for investors that do not possess the time or the resources to trade the markets manually. Forex trading is one of the riskiest leveraged products in the financial industry, and automated trading bots may be able to offer a semblance of sanity for unsuccessful traders, who might have tried every strategy in the book to succeed in the markets without any luck.
Are Forex Robots Consistently Successful?
The profitability of an automated trading program is determined by the strategy, reliability, and the long-term efficiency of the trading system. As a trader, you should not assume that using a Forex robot is the more successful alternative to manual trading; neither should any investor expect 100% consistency in the results. FX robots are mere programs that are designed by human traders, which can have both positive and negative results. A programmed trading bot will only succeed in eliminating the human factor of trading. Therefore, unlike manual trading, FX trading systems are pretty binary in their operations and are not capable of adjusting their strategies according to market conditions.
Investing in the financial markets requires traders to constantly tweak their strategies and adapt to the changing market environment for succeeding in their trading ventures. Therefore, Forex robots should always adapt to the changes in trading conditions and should be willing to incorporate new rules of trading that can help them to stay on top of the market trends. Often, Forex robots are installed as set it and forget systems, which might work initially, but long term results can be questionable. This is the main reason why a majority of retail trading bots are sold as a monthly subscription model to enable the programmers to offer periodic updates to their clients.
It is also common for traders to find automated programs that have less than average performance. These programs are mainly developed to make money from unsuspecting traders. Some of these bots also claim to offer huge performance numbers that may seem too good to be true. Due to the open nature of the market, automated trading is susceptible to a fair amount of scams, which will not only cost traders a huge monthly maintenance fee, but will also end up being incredibly disastrous for their trading accounts. Therefore, try to stay away from these potentially harmful programs by doing your research carefully.
Forex Auto Trading Strategies Of Established Hedge Funds & Large Banks
A majority of the leading hedge funds and banks usually develop proprietary automated trading systems that are kept private from the public eye. These highly secretive automated programs are considered to be among the best Forex robots in the industry but are usually not made available to the general public. There are numerous reasons behind the guarded nature of these systems, as these organizations are typically large market movers that can induce big movements in the markets. It would be contrary to their trading strategies to impart these systems to the public, as the primary responsibility of these systems is to take money away from the retail traders. These systems are also designed for large trading capital, which is capable of controlling a significant portion of the overall trading volume. Therefore, it is close to impossible to adopt the same strategies for retail trading automated systems.
What Are The Major Downsides To FX Robots?
Forex robots have numerous risks that are expected from automated trading. Some of these risks and disadvantages can be quite detrimental to amateur traders, which is why you should be careful while choosing a Forex robot for your trading strategy.
- Forex robots are programmed systems that replicate the strategy of other traders unless you have designed your robot according to your own preferences. Third party robots usually implement strategies that might not be suitable for all trading capital and leverage options.
- Robots cannot read the markets as a professional trader. All they can do is open, manage, and close positions according to a pre-set list of indicators that satisfy certain market conditions, which prevent the need for manual intervention. Sometimes, the market may respond in strange ways, and as a manual trader, you can deal with unfavorable circumstances by personally managing your trades. On the other hand, automated trading will not respond in a way that can limit your losses in a timely manner.
- Automated trading bots can be expensive, which will not only require you to pay a hefty subscription fee, but they can also erode your trading capital if you have chosen a system with a lackluster track record. Automated trading bots are known to be unreliable, especially if they lose the connection to the server for any reason.
- Using bots will prevent the trader from getting a first-hand experience of the market dynamics. While automated trading may seem to be convenient at first, manual trading knowledge of the market is vital for long term profits.
- One of the biggest drawbacks of a Forex trading robot is that it still requires manual supervision, regardless of what the service provider claims. Even if you are successful in choosing the best performing trading system, you are still required to supervise the trading activities and ensure that they do not open illegal positions or let your losses run due to any program errors. Manual supervision is mandatory for all types of automated trading strategies.
- Some brokers do not allow automated trading systems, especially due to the high-frequency trading employed by some bots. Therefore, you will have to check with your broker before paying for an automated system.
Tips To Help You Choose A Profitable Auto Trading Bot
• Choose A Reliable System That Has A Solid Performance Record & Verified Recommendations
It ‘s hard to find a top-performing automated system that hasn’t had a negative history. If there is a genuinely profitable trading system, its creators wouldn’t need to sell it to traders to make money. Therefore, it is best to get rid of any notions about finding a 100% successful trading robot for managing your account. On the other hand, you can find trading bots that offer a bit more than 50% success ratio that holds on to wins and minimizes losses. There are a few profitable trading robots in the market that does not promise any large gains but promises to offer a stable, consistent trading performance. Most of these reliable robots also come with verified recommendations from real consumers, which can provide an excellent reference point before subscribing to their service.
• Consider The Cost Of Subscription To See If They Make Sense From Return On Investment Perspective
Some trading robots are ridiculously expensive, especially if they are promoted by celebrities or other famous trading personalities. Always compare the cost of the subscription with the average returns that you receive for your investments. If the cost doesn’t add up, you should try to find a more economical trading bot, regardless of the promises and future return potential. You should always work within your means, as Forex trading is all about conserving your capital and taking the profits while you can.
• Demo Trade An Automated System Before Moving Into A Real Account
Once again, the best option of finding an excellent trading robot is to test it on a demo platform before moving to a real account. Even if you are paying a massive premium for your automated trading subscription, spending a few months on a demo account is an excellent way of determining the efficiency of the system, and finding out whether it is capable of improving your overall profits. Spending a few extra bucks on testing different robots will help you in the long run, especially if you are approaching the market with a significant trading capital.
• Choose A Forex Trading Robot That Offers Instantaneous Support & Periodic Updates
Forex auto trading robots are ultimately financial products that involve a buyer and a seller. As a consumer, you should receive excellent services for the amount of money you are paying to a developer or a programmer. Therefore, you should have unhindered access to the best in customer support and be able to receive the best updates promptly. If you feel that your current service provider lacks the professionalism to tend to your queries or suggestions, it is a clear sign that the system developer is not as dedicated to the market as they ought to be. Automated trading bots require constant maintenance, debugging, and routine updates to stay abreast of the new market developments.
How To Install A Forex Trading Robot On Your Platform
Forex robots are designed as installable programs that are built according to the different platform requirements. The MT4 terminal, which is the most popular trading platform in the FX market, allows programmers to develop different versions of Expert Advisors (EAs) that can be built according to different strategies and trading conditions. The MQL4 community offers a vast database of bots that contains numerous free as well as paid Expert Advisors for seamless integration of automated trading with all versions of the MT4. Similarly, all other platforms in the market (both third-party and proprietary platforms) also possess similar trading robots and built-in programs that enable traders to install the specific automated trading software according to the type of trading platform.
It is relatively easy to install a trading robot, as all bots come with instructions at the time of signing up. There are online forums, such as the MetaTrader’s online MQL community, which provides free advice and tips for new traders on installing and operating the trading robot. Most automated trading systems require the platform to be online throughout the duration of the market hours to perform at the peak of its potential, as any disconnection from the trading server can lead to trade errors and robot malfunction. If there are frequent disruptions due to an unreliable trading terminal or a spotty internet connection, the robot can have a significant deviation from its trading performance.
If you are worried about the reliability of your internet connection, or if you do not have access to a dedicated trading terminal that can run non-stop, you can consider the option of using a Virtual Private Server (VPS). A VPS is a unique offering in the FX trading market that allows traders to install their trading platforms and their automated Forex trading bots on virtual servers, which will be operational for 24 hours a day and 5 days a week during regular market hours. These VPS services are either offered by Forex brokers or by third-party service providers for a fixed monthly fee. Some of the best Forex brokers in the industry also provide a free VPS option to its traders for depositing a prescribed amount of trading capital or for traders that transact a minimum number of lots per month. VPS offers low latency and better connectivity to the trading server without worrying about any reliability issues that may affect the performance of your installed trading robot.
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Designing & Publishing Your Own Forex Auto Trading Program
Although designing and programming a trading robot is not an easy task for traders without any programming knowledge, several companies and brokers are now offering a chance to create automated systems through dedicated software that does not require any programming expertise. These programs allow traders to specify a wide range of trading conditions and develop a trading bot from scratch, which can be used on any of the popular trading terminals on the market. On the other hand, expert programmers can also take the conventional route of coding a program using the core programming language, which offers better flexibility and more control over all the fine aspects of programming.
Once you have developed a Forex trading bot, you can also choose to sell it to the public along with using it for your own trading strategies. If you are successful in developing a reliable trading system, people will pay for your services, provided you can back up your claims with real performance record in a live trading account. You may also choose to offer your programs for free, which can help you gain a significant amount of exposure in the global trading market. However, beware of the negative impact of publishing your programs on a public domain, as there is a huge chance for criticisms and negative feedback, which can quickly escalate into serious consequences.
You should not rely extensively on a Forex trading robot for managing your account. A good strategy would be to complement your manual trading with automated trading systems. However, some traders rely heavily on Forex robots for all of their trading needs and enjoy a moderate amount of success. Forex auto trading is certainly a concept that is here to stay for the foreseeable future, with all the trends indicating a rise in popularity in the coming years.