What Are Forex Robots: Automated Trading Robots
While learning from your mistakes and remembering how different events influence the price chart is a viable strategy for a beginner, it’s not the only strategy. It’s true, you have to learn how to anticipate price movements, and to trade in general, but you don’t need to stumble endlessly in the beginning.
Mistakes cost money, and some reckon it’s better to spend some money on trading signals – events important for the market – from professionals rather than lose your savings constantly. Let an automated system process these signals, and that’s how you get a Forex robot.
What is a Forex robot?
Forex robots are programs that use fresh information about the market movements – the trading signals – to make decisions on the same market for you. These programs usually take into account the technical events, market trends of the past, but some may use news events, although you have to tweak a robot very hard.
These technical signals advise you (or a robot) to buy or sell currency because in the past the same event that occurs now has led to a favorable situation. You can follow this advice yourself, but the robot can do the same without emotional or psychological weight.
So, there are generally two reasons why many people choose to entrust their money and potential profits to a heartless algorithm:
- Robots never doubt or panic – these feeling often bring losses where a rational being would only benefit
- Robots allow people to automate the entire process. Why watch the charts when a robot can do it for you?
This logic has some flaws, however. The robot is only as good as its creators are. Although it will have faster reactions, it won’t necessarily be smarter than you or the signals provider.
But there are also technical problems. Robots make mistakes, and they make them especially good in two situations:
- When the market enters a volatility period
- When you need to invest into something long-term
A robot can’t anticipate surprises, it can only anticipate something that happened before, and surprises are unique.
And even in ‘peaceful times’, you can’t expect a robot to operate flawlessly – it will make mistakes. It’s highly advised that you don’t entrust important tasks to your system and that you keep an eye on the signals and the charts yourself, if possible.
Where can I get one?
The most common way of acquiring a working Forex robot is buying one. It is very risky, and you shouldn’t just obtain the first system you see. Give it some time. And you also don’t need to necessarily buy one from a broker company. A big name and a large audience don’t mean the company can be trusted, especially in this business.
If you know you can trust the broker and if they have a quality automated system, you can give it a shot. However, it’s more reasonable to buy one from the community. Robots are written manually, you don’t need a full team of specialists to create a functional robot.
On the contrary, it’s often the community that creates fascinating indicators, scripts and robots – often not even for commercial purposes, but for their own needs. If you know an experienced trader who made a robot for themselves, you can buy a copy from them. Don’t be stingy, however – it is a serious piece of software.
Developing your own robot
If you want to develop your own robot, you need to keep several things in mind. First, it is a job for experienced traders who know how trading works. Second, most robots are built on MetaTrader with the help of MQL language, used to create scripts and similar algorithms. Third, you’ll still need a signal provider.
The exact way of developing a robot is a complicated matter, but suffice it to say that you’ll have to write the sequences manually based on the historical data from before. It is a tedious process, and it requires a lot of tinkering and tweaking, not to mention loads of testing.
Backtesting and frequent paper testing are just two ways of making sure your robot is still up to the task.
Remember: you don’t need to create a panacea for all your problems. You can make a robot that would deal with a specific type of trading to relieve your burden and make your life simpler.
Which robot should I get?
There are several widespread robots that you can buy with ease on the Internet. They vary in different aspects, such as ease of operating, specter of timeframes and more. Most can easily be installed on MetaTrader, as they are either compatible with the software or were designed specifically for it.
It’s recommended to use MetaTrader 4, because the MT5 doesn’t exactly tolerate the third-party software.
Now, let’s group several robots worth buying by how easy they are to operate, since one of the more productive functions of these systems is to improve the user’s understanding of trading and how different events affect the price.
Novice level: Ganon and Itic Software
These pieces of software are easy to operate, have a large variety of features to speed up almost any buying process, and they let you see why certain positions should have been closed or opened. Both of these are available for MetaTrader 4.
Average level: Westernpips Private 7
It is a very fast robot that can take information from several charts at the same time and make conclusions a lot faster than many other robots, much less a human being. But the cherry on top is that Westernpips comes with its own terminal – much like the MetaTrader, although made entirely to fit the robot.
It is a slightly more advanced model, because it’s not compatible with the MetaTraders. The MTs are very efficient trading platforms, and in case you’re a beginner, you’ll have to install one of them to help you better understand the trading.
Professional level: GPS
This service is fairly easy to grasp, it is effective and friendly to users. However, the service makes a great emphasis on their trade copying mechanism. While you may just trade as usual, it’s unreasonable to pay extra for GPS and not even use their copier.
Copying is an advanced technique that has you copy the positions of other users to your benefit.
You should consider buying one of these robots if you want to automate your trading experience. Automation is very good if you want to make your job a bit easier or if you want to make your performance a lot more precise, although it may be overkill.