Types of Forex Trading
The Forex trader do not use forex robots, he places trade manually.
Fully Automated Trading
This involves the use of forex robots. The forex robot is programmed to react to certain trading conditions. When trading conditions are met, the forex robot may place trades on behalf of the trader.
Semi Automated Trading
A mix of using forex robots and manual trading. The trader may get signals from the forex robot when trading conditions are met, but it would not place trades for the trader. Instead, after receiving the signals from the forex robot, the trader would check for other conditions which the forex robot might not be able to do such as news reports before placing the trade manually.
What Are Forex Robots?
Forex Robots allows forex traders to perform automated/algorithm trading. It used to be used alot only by huge trading firms but nowadays it is getting more and more popular among individual forex traders as well.
Is it a metallic human structure that trades the market for you?
No, that is far from reality!
Forex robot is a program that can be run with the forex software that you use. The most common software for forex trading is MetaTrader. Hence, most of the forex robots are made for Metatrader 4/5. There are also other forex software that forex robots can run on such as NinjaTrader, TradeStation and many others.
The term forex robots can be used interchangeably with forex expert advisors and forex eas. Eas is the short form of expert advisors.
What can the Forex Robot Do?
Automate almost any trading strategy
Forex robots trade mainly on technical analysis. For example, a trader can set the forex robot to open a buy trade when there is a moving average crossover. Forex robots can automate almost any strategy that the forex trader wish to use. As long a trading strategy can be properly defined, it is very likely to be able to be programmed into the forex robot, reason why it is “almost” is because there are some fundamental analysis that a forex robot might not be able to analyse as well as a human. For example, reading and analysing the news.
Watch the Market 24 Hours
No one can watch the market 24 hours a day. When a trader is away from the screen, he might miss trades. But with the forex robot, the forex trader just needs to run it on his forex trading software, and it would watch the market and place trades on behalf of the trader. Even when the trader is asleep, the forex robot is still running and Other than placing trades, the forex robots can also give alerts to the trader whenever a trading condition is met.
Forex robots can be very useful for scalping and for certain forex strategies that require very fast reactions and quick calculations. In a volatile market, forex robots are able to execute certain forex strategies that traders cannot manually trade.
Advantages Of Using Forex Robots:
More and more people are relying on forex robots to perform automated trading as it has better performance than humans in many scenarios.
Forex automated trading was used to be only for large trading firms, but these days more and more retail traders are able to take advantage of forex robots for automated trading, Forex robots can be used to complement your trading strategies or even take over all your trades. Almost any trading strategy can be automated with forex robots.
Everyone has a limited amount of time to watch the market. Manually trading the market would take alot of effort and time.
If the trading strategy is placed into a forex robot, all the trader has to do is to launch the forex robot onto the chart. The forex robot will watch the market in place of the trader. It would be able to give alerts or even place trades for the trader when trading conditions are met.
Do Not Miss Opportunities
Have you ever woked up in the morning, and realised that there was a trading opportunity that happened last night while you were asleep?
When you are away from the screen you might miss out many trade opportunities.
The advantage of using a forex robot is that it does not sleep. Instead, it keeps watch at the market at all times.
Take Away Emotions
Have you ever had a trading plan, but find it very hard to follow?
Whenever the market moves, your emotions move with the market. When you should be closing trades to get the profit based on your trading plan, you are greedy and do not follow as planned. Instead you wait and expect it to rise higher, in the end, you might result in a lower profit or even a loss although your trading plan was right.
Whenever you face a loss, you should cut loss according to the trading plan. However, you do not want to be wrong and wait for the market reverse its direction. In the end, you are forced to close the trade facing a huge loss when the market did not reverse.
Does all the above happen to you?
Even if you end up eventually with a larger profit by not following the trading plan, it is largely due to luck. It is unlikely to be able to last in the long run.
We cannot blame this on anyone but ourselves, and it happens at times even for experienced forex traders. This all due to our emotions. By taking advantage of forex robots, a trader is able to follow exactly to the trading plan as it is programmed into the forex robot.
Execution of trade by the Forex Robot/ Forex Expert Advisor is much quicker than any manually executed trade.
Forex Robots, however, can do calculations in the backend in milliseconds and would not make any calculations errors. For trading strategy uses many indicators, it would take quite some time for a trader to manually calculate. That would cause delays in the trades being placed. As a result, the market price might have already changed by the time calculations was done.
This is perhaps one of the most useful features of forex robots. Backtesting is making use of past data to determine the results of a trading strategy. It can be done manually or by using forex robots. With the use of forex robots, you will be able to quickly test a strategy over years of history data within minutes.
Warning: Forex Scams Alert!
If you look on the internet, there are many websites and companies selling ready-made forex robots. They will promote it such that its a holy grail method and show you all how profitable the forex robot is over the past few years. Since it has shown such good results, when I get this forex robot, I am sure to profit from it, is that right?
Think again! Let me explain why this is not necessarily true.
Losing All The Money
Getting a forex robot to perform trades for you while you are asleep is good way to make passive income. There are many successful forex traders that uses only automated trading systems to make money.
But why are so many people buying forex automated trading robots and see their money in their account disappear?
“99% win rate Forex Robot!”
“200% gain in one week!”
How true are these statements?
High Risk Strategies
A forex trader has to be cautious when purchasing ready-made robots as many of them do not disclose the exact risks to their customers. Many people has fell victims to these forex robots that these companies and websites promote. They hope for quick cash without putting in any effort. In the end, they lose their trading account.
So why does this happen?
An example of this is that some forex robots do not place a stop loss for its trades, it would only close a trade in a profit. The profit level is set such that it is easy to hit. Since most of the time the market would hit the small profit target, the forex robot would show a nice profit graph. However, this is a high risk strategy as it means that if the market unexpectedly starts trending in the opposite direction, the trader will lose a huge sum of money. Hence, it is important to find out how your forex robot actually works.
How To Be Safe
To determine if a forex robot is profitable, the forex robot has to be repeatability tested, over history data, demo accounts and also live accounts. Since every forex trader has different risk tolerance, it is recommended that they find a forex robot suitable for their risk appetite or create a forex robot according to their own trading strategy.
Traders have to be aware that markets are always changing, although what has happened in the past can on a certain extent give some insights into the future, it is not 100% that the future will be the same as the past results.
Do Profitable Forex Robots Exist?
You want to get rick quick.
A forex robot that could automatically earn passive income without doing anything.
That would be a dream come true for you!
But does it exist?
If a Forex Robot was so successful, why would the creator/developer of the system need to sell it?
The creator might not have that much funds in his trading account. For example, a forex robot might be profitable by attaining a 4% return every month. But assuming if the creator has only $1000 in his account, that will make him only 4% of $1000 which is $40. But if he sells the forex robot, he might make much more than that. It is a guaranteed profit as here is little cost involved in selling a system once a system has been made. Its another way that the trader can make his money, and he can place his profits into the robot to make him even more money.
Above is the ideal scenario why forex robots are released, but many times it is not the case!
Many of the forex robots in the market are not profitable. The reason why there are so many non profitable forex robots is that it is not easy to make a profitable forex robot. The creator will make use of all kinds of promotion and marketing techniques to promote this useless robot and he makes alot of money from the sales. Since people are expecting to see the results as promised, many of them purchase it and suffer when they see their account balance on the decline and have no means of getting back the money.
Profitable forex robots do exist but they are not easy to find. Many profitable forex robots are kept secret by the companies and traders themselves as they have no reason to release them to the market when they can achieve enough profit from it.
What Are Truely Profitable Robots?
There is no 100% profitable forex robot. A profitable forex robot can be defined as one that wins more than it loses.
The forex robot has to have tight stop losses. Ideally, the reward to risk ratio has to be more than above 1. A forex robot that wins consistently because of a small profit target and a huge stop loss cannot be determined as a truely profitable trading robot.
For a forex robot to be profitable in the long run, it has to adapt to the changing market conditions. Either the forex robot automatically adapts, or the trader can also adjust the settings for the forex robot when market conditions change.
Many forex robots are not programmed the adapt to changing market conditions as it is not easy to do so. Hence, a forex robot might be profitable for some time, and it becomes not profitable afterwards.
100% Win Rate Forex Robots
When a website promotes a 100% guaranteed win robot, you got to be skeptical. There is no trading system that will wins 100% of the time, there will be times when it wins and times it loses.
Double Martingale Strategy:
Double Martingale is a very popular strategy used by many forex robot creators.
Why Double Martingale?
It makes 100% wins almost all the time. From the trading results, forex robot promoters can you a 100% win rate.
It is true that it wins 100% of the time, but how long can that last?
If you decide on buy such trading robots, you have got to have a high risk tolerance. Although the chance of losing is small, but once the forex robot loses, you would lose the whole account. Find out more about the Double Martingale Strategy.
Past do not determine future
Even if a website shows that it is profitable in the past, it does not determine the future and no one can predict with 100% accuracy how the market will move in the future.
Forex Robots in the Market:
Forex robots can come in two forms:
100% Automated Trading Robots
This allows for 100% hands free trading. Forex robot would determine trading conditions and place trades on behalf of the trader.
Forex Indicators / Forex Signals / Forex Alerts
These is considered semi automated trading. Instead of placing trades when trading conditions are met, it gives alerts to the trader. By using these robots, it will only tell you when trading conditions are met. You will still have the final option to decide whether you want to take the trade.
Free Forex Robots
Why should you use them?
Free forex robots provides you a quick way to try and test out different strategies. You wont have to spend anything. By trying out these free forex robots, you can have a good idea what type of strategies suits you better. It also enhances your knowledge on using forex robots.
Please read and understand the risks of forex robots before using them. If risks are not stated, talk to the developer of the robot to find out. After downloading, make sure to do enough tests on the forex robots before trading them on live account.
How To Run Forex Robots (MetaTrader 4):
Although forex robots may sound complicated..
Running forex robots / forex expert advisors on MetaTrader 4 is very simple!
It can be launched in just a few clicks!
What You Will Need:
- An account with a forex broker that allows automated trading
- MetaTrader 4 downloaded
- Internet connection
Open Metatrader 4:
- On the left top corner, click on File > Open Data Folder
- In the folder, click on MQL4 > Expert Advisors. This is the location that you will save the Forex Robot.
- Download the Forex Robot and save it into that folder.
- At the top left, click on View > Navigator. A window would appear. In this window, search for the Forex Robot that you have downloaded, it will be under the Expert Advisors section. If the Forex Robot is not found, restart Metatrader by closing the Metatrader window and reopening it again.
- Once the Expert Advisor is found, enable auto trading by clicking on the Auto Trading button. Alternatively hit Ctrl + E.
- Finally, you may run the Forex Robot by dragging it onto the chart.
What happens when my computer is turned off?
The forex robot will run as long as you do not remove it from the chart.
It can also be automatically removed if it was programmed to be removed automatically after certain time or when certain trading conditions are met.
The forex robot will only run if MetaTrader 4 was open. If you close MetaTrader 4 or turn off your computer, the forex robot will stop running. Hence, if you require the forex robots to run 24 hours a day, you have to leave your computer on for the whole time. Alternatively you may consider to use a Forex VPS service which allows you to run your forex robot on a private server.
Hope this tutorial gave you an overview of forex robots. With this basic knowledge on forex robots and knowing how to make full use of them, you have higher chance of achieving greater success in forex trading.