An Answer to the Question Surrounding Forex Trading Robots, To Buy or Not To Buy
There has been an overwhelming increase in popularity of forex trading robots in the recent past, even with the dubious returns that they generate. It is no secret that nearly all those who have an interest in trading currencies have at some point in their trading carriers considered buying one of the software that are advertised online as the competitive edge needed in trading. Little merit can be attributed to these ostentatious claims. However, for those intrigued by them, it is important to be aware of some things that will guide them to overcome the dilemma posed by forex trading robots to buy or not to buy.
A forex robot is an automated system that plays the role of a human trader by entering trade orders. They generate returns by applying mathematical rules that had been programmed by the creator, meaning that the skills and intelligence of the robot depend entirely on its creator. Forex robots run the same pre-programmed routine at all times. The routine does not change, regardless of the current conditions of the market. They also use the programmer’s instructions to cut losses.
The robot executes different commands using the technical analysis tools. Sophisticated programmers also employ back testing to optimize the results produced by their systems. This process is usually automated by fine-tuning the program to improve its performance on various aspects of money management such as the placing of stop-loss orders and maximum drawdown.
Problems Associated With the Use of Forex Trading Robots
Forex trading robots have quite many problems not only in the logic that was used to create them but also the results they generate. One of the most obvious issues is that these automated systems lack testing in the actual market conditions. In most cases, programmers test them on historical data and various non-trade related problems like connectivity issues. Problems originating from the brokers are not usually reflected in market data and are therefore ignored. An example is that robots are rendered useless in the event of an inevitable technical problem that originates from the local Internet Service Provider, causing a brief blackout, which wipes out a trader’s account. Similarly, an automated system will prove to be useless in the case that the spreads of a broker widen to very high levels than those prevailing in the majority of the market. Survival during such periods can only be endured through the use of good money management methods such as employing proper stop-loss orders and being prepared and willing to recognize and admit loses.
Secondly, another issue arises from the fact that through the use of forex automatic trading robots, traders are giving a machine total control over their finances. The machine lacks the ability to think and reason out. As mentioned earlier, it is meant always to operate according to a certain set of rules, lacking the ability to adapt itself to changes in circumstances and conditions, regardless of the severity of the changes in the market. This can be described as the most important demerit of using robots in trading forex, where change isn’t a choice, but a necessity.
Lastly, a robot was created by a fellow human being. With regards to this, it is correct to state that the automated systems are as smart as their programmers and creators. Knowing this, do you think that the vendor selling you the system is a market genius who shares the same level of success as George Soros and Warren Buffet? Even the best traders in the world have had their fair share of disappointing trades. What makes you trust the mind of these creators and after all, they are fellow trader just like you? If you are uncertain of the know-how of your vendor, then why are you so inclined to believe that the rules that they have written can produce exemplary results at all times? Remember that even the best traders have not been able to achieve continuous overwhelming success, like that promised by the creators of these automated systems.
Still wondering whether to get one? It is not advisable to buy any forex robot that you do not completely understand and know. The basic principle of being a successful trader is never to invest without enough information or knowledge about your investment. A useful and effective forex robot is one that a trader can use to automate his or he own trading strategy or a system that you completely understand and have confident in, having examined its inner mechanism and design. When people buy trading robots, they are totally in the dark on how they perform. The creators are also not better of as they are uncertain of how to constantly create good returns.
On the other hand, traders can create their technical schemes and automate them by purchasing Forex AI packs from forex brokers or API developers. There is nothing wrong with choosing this method. However, most people lack the confidence and experience necessary to create and customize these tools themselves, and this is the reason robots have continued to grow in popularity.
Conclusively, forex automatic trading robots present an alluring and great idea that seems to hold a lot of promise. The sad thing is that they do not deliver a lot because of the random nature of price action. Hopeful, this article has given you insight into whether or not to buy an automated system. If you are still in a predicament on which course of action to take, try to consider the obvious. If these systems provide the incredible results as claimed by their creators, then why would they sell them online for such small sums? In fact, if the robots delivered remarkable results, the owners would need not to advertise them, they would be sold by their track record. Moreover, financial institutions from all over the globe would be rushing to acquire these products. However, this is not the case; brokers and large firms ignore the robots and opt for other methods of trading.