Forex traders need to make decisions in a fast-changing market. Sometimes, you may wish the system worked automatically, buying and selling currencies on your behalf. With modern software, it is perfectly feasible! Using trading robots, you may program your terminal to work on “autopilot.”
This is, essentially, a hands-off approach to trading. All you need is to pre-program the strategy. Tell the system when and how it should enter and execute trades, and set it in motion. This trick is used by beginners and professionals alike. However, using robots has its intricacies. Discover the fundamentals in our guide.
Introduction to Automated Trading Forex Robots
A trader, relying on fundamental analysis, utilizes indicators and patterns to analyse charts. They generate trading signals and filter out low probability trades. The trader defines the capital to invest and manages risk by setting stop-losses. Traders may also develop consistent systems and approaches to trading certain pairs.
Forex trading robots are no different! They follow a predefined strategy in analysing currency pairs. They set stop-loss orders for risk management and allocate capital for each trade. Present market conditions must agree with predetermined parameters. Robots use historical data to predict the outcomes of trades. They can generate and filter forex market trading signals.
Not all bots run autonomously. Some have manual modes, allowing the human trader to interpret and verify the accuracy of the signals. That’s why they are also called Expert Advisors, abbreviated as EA.
How Does Trading Forex Autopilot Work
Developing reliable automated trading software is as complicated as it gets. Top trading bots have solid teams behind them. They keep evolving and adapting to changing market conditions. A bot may be only as good as its creators because it is much more than a mathematical formula.
Now, it’s vital to have the right expectations when using bots. Forex autopilot trading will not make you millions in a spur-of-the-moment. Even the best traders and bots don’t turn a consistent profit every time. Trading is risky because markets remain unpredictable even with bots. Here are other key points to note when robot trading forex autopilot:
- Robots employ different trading strategies.
- Technical indicators form the basis of most automated trading robots.
- Bots understand metrics and may analyse past data. But they are not great at fundamental analysis or gauging current market sentiments.
- Developing a trading robot entails creating a trading system that’s tested using historical data. Past events influence how a bot arrives at a decision.
Made-for-Purchase Forex Robots vs Self-made Robots
Ready-made forex robots are trading software developed for the end-user. Thousands of traders worldwide may end up using the same robot if it’s sold online. Unfortunately, many robots, including both paid and free, don’t work. They have negative profit factors. You need a trading robot with a profit factor of more than 1. For instance, a trading robot with a profit factor of 2 means that you can invest $10 and gain $20 over the long run.
Poor EAs have high drawdown percentages. It’s the percentage of the reduction of your capital following losing trades. Never choose an EA with a drawdown percentage of over 50%, regardless of its profit factor.
What about money-back guarantees of up to 30 days? Does this mean that the bot is very effective, popular, and guaranteed never to fail? There’s a tendency for new trading bots to turn profits over the short term. The tide may turn against them as market conditions change.
The alternative to purchasing a trading software is developing one yourself. Most bots use a scripting language such as MQL. The software may function independently of MetaTrader as a standalone program. Alternatively, it may be integrated with MetaTrader.
Why create trading robots? If you have developed a proven trading strategy, you may wish to automate it. You need programming expertise or may hire a programmer.
By automating the manual process of applying your system, you leverage the analytical power of trading robots. Bots may analyse vast amounts of data quickly and track many charts at the same time. Building a bot means you have an intrinsic understanding of how things work. The only negative aspect may be the start-up cost if you hire a developer.
Benefits of Forex Autopilot Trading Robot
1) Making emotion-based decisions is one of the perils of trading as a human. Robot trading systems are not susceptible to rash, emotion-based decisions. They are much more analytical and disciplined.
2) Orders are only executed after certain requirements are fulfilled. Trading opportunities are thus, more accurate.
3) Trading systems can run 24/7 and analyse many markets at the same instance. Some training EAs can track about 30 forex foreign currency pairs. As a human trader, it’s impossible to spend 24 hours a day, five days a week monitoring markets.
4) Bots developed by experienced and top traders allow beginners to trade like experts. EAs are essentially automated trading systems. It may short-cut the need to learn and try out different strategies to see what works.
5) Backtesting allows traders to rate the performance of the expert advisors, utilizing past trading data. Note that, with some low-quality bots, the variables used in the backtesting process may be manipulated to show that the trading robot is successful, only to fail in the long run.
6) Improvements may make a trading program more efficient. The same way that Windows OS will not be fully developed is the same way that a trading software will never reach its peak perfection. That’s why it’s essential to work with a regularly updated bot.
7) Forex autopilot trading has a low barrier of entry. Average prices for trading robots range from $200 to $500. Configuring the autopilot to work with Metatrader or as a standalone is not complex either. New traders can seek help from freelancers if they so wish. Some vendors also provide easy setup support.
Cons of forex autopilot trading robots
1) Robots are not thinking, intelligent beings. Their operation is limited to a hard-coded set of instructions. Even artificial intelligence trading robots are not a match for a highly trained trader. Humans may respond to fundamental analysis and reason creatively.
2) The market is unfortunately flooded with scammy and unprofitable trading software. It makes finding a reliable automated forex trading software difficult.
3) Trading robots with high drawdown percentages and low success rates have drained customer accounts.
4) Most robots are not truly hands-off and simple. It takes skill to set up custom parameters. It can introduce unforeseen complexity.
5) Robots are not adept at responding to news releases such as geopolitical events. Before a major news release, the approach of most robots is to halt trading for a while or tighten stop-losses.
6) Sites that review autopilot robots may not provide full disclosure of their testing methodology. Testing conditions may not apply to the individual traders, leading to a miss-match of results.
7) Changing market conditions may render a trading bot useless. That’s why it’s advisable to choose a robot that’s updated and constantly tracked.
Advice and tips when selecting a forex robot
When selecting a trading robot, check its drawdown percentage, initial cost, required first deposit, profit factor, monthly returns, and the days it has been actively trading. Consider the trust score of a website that may be recommending bots
Check other aspects, such as the supported platforms (commonly MetaTrader 4 or MetaTrader 5). Some experts recommend working with an ECN broker with fast execution speeds. Consider the supported timeframes and currency pairs. Also, carry out research and read real reviews by other traders to know how they feel about the automated trading software.
Some platforms offer robot trading software for free. While this may be the case, they will ask traders to pay a minimum deposit. For proven advisors, the initial deposit may be as high as $2500. Aside from forex trading, there are bots for trading binary options, gold, futures, or crypto. Consider if the trading tool manually generates trading signals as well.
Various Strategies Used by Trading Robots
You may also decide to choose trading robots based on the strategy they use. Some common types include:
1) Martingale and grid bots (it’s recommended that you avoid this option)
The consensus is to avoid trading robots that use this forex trading strategy. It entails opening subsequent orders following losses. Trade sizes are doubled until a single winning position covers previous losses.
2) Swing trading bots
Traders will also encounter many trading robots that use the swing trading strategy. Such robots can track open positions for a few days or weeks.
3) Breakout trading bots
These days trading EAs track sudden pip movements for several seconds. The robot gauges whether sharp movements will result in a breakout event. For instance, if the price rises by 5 pips over 5 seconds, the algorithm may execute a buy order. Expert advisors utilizing breakout strategies may also trade high impact news. They capitalize on increased market volatility.
4) Harmonic and price action patterns EAs
The EA identifies price action patterns and executes buy or sell orders. Some harmonic patterns may include Shark, Crab, Bat, Butterfly, Gartley, etc.
5) Pending order bots
These trading robots are configured to place pending orders in the expectation that the price will break out in certain directions.
Frequently Asked Questions
1) What is a VPS server? Is it needed for trading Forex autopilot?
Keeping your PC on 24/7 and utilizing a home internet connection to make trades may pose a challenge. Most professionals run forex robots on VPS. Hosted on data centres, VPS provide low latency networks needed by robots for ultra-fast order execution.
2) Should I use a free EA?
Getting your hands on a free EA and without providing an initial deposit is quite possible. Most free versions however may not turn a profit. They may be over-utilized and lack updates. Another key piece of advice is to avoid a pirated version of an EA.
3) Can forex robots make you money in Malaysia?
Yes. It is possible to earn money with forex autopilot trading. Before using a robot, know how it works by reading the manual and terms. Test it with a demo before making a full investment. Remember that you may need to respond to unexpected market movements.
Taking a hands-off approach is not always the best course of action. Traders also need the skill to know the limitation of the forex robot and when to stop using it. Some traders will diversify their portfolio by using multiple trading robots.
Is Automated Trading Profitable?
By default, forex robots can spot more market opportunities than any human, they react more quickly, and emotions are not an issue. All too often, we make mistakes because of stress, panic, or excitement. Robots have no emotional states, so they are perfectly objective. But does this also mean their actions are always lucrative?
It is impossible to compare profitability in manual and automated treating. Instead, focus on the situations when each mode works best. For example, you would:
- use EAs for typical trading opportunities that repeat themselves;
- use EAs when speed is important;
- trade yourself when the opportunity is unique.
If you could just provide instructions, sit back and rake in profits, every trader would be a millionaire. Those who have traded Forex for a while know that nothing in this industry is easy. As you may guess, the use of EAs is quite complex. They do require intervention, at least occasional. You need to monitor performance and make changes when necessary.
Some traders design their own EAs, others rely on ready-made tools. Robots may be purchased or installed for free. Some are also integrated into the most popular trading software, and their performance varies greatly.
There is plenty of free autopilot forex software, but typically you need to spend more than a few dollars. For the scheme to work, you also need to improve your skills, so you know when to intervene. Still, learning how to automate trades is a worthwhile endeavour.
Steer clear of any sources depicting trading forex autopilot as a path to easy money. No reliable provider will present them as foolproof. Of course, electronic systems can analyze immense volumes of data, but their decisions are not accurate 100% of the time. If you just mindlessly give up control over the trading action, the results could disappoint you.
Are Forex Robots Legal?
Using the forex autopilot trading system is perfectly legal. You are free to choose whether to use your own skills or delegate to a robot. However, if you create your own EAs and decide to sell them to others, this could be against the law depending on your promotion style.
Companies presenting robots as a surefire way to make money deceive customers on purpose. Clearly, this is not permissible. Trading forex on autopilot never guarantees particular results. If you ask experts, they will tell you that using forex robots is not the best idea for beginners. Instead, you should learn to trade currencies on your own. Use EAs only afterwards, when you can truly understand how to fine-tune their parameters.