The dream is to be able to make money in your sleep, and forex trading robots are marketed as being the tool for making this possible. They have become wildly popular due to the attractive notion that you can do very little and become a millionaire. However, how true is this? Do they work?
Top Wall Street traders make millions due to their ability to reason and keep emotions under control. This is something most people struggle with. When placed under pressure most of us take desperate actions or even break down. When money is involved, most amateur traders throw strategy out of the window and gamble. Forex robots take emotions out the equation. They also aim to save time. An analysis which would normally take an hour is completed in a few seconds.
Software doesn’t make itself. The strength of any forex robot lies in the team which made it. Therefore, not all forex trading robots are made the same. For instance, banks and hedge funds have advanced software which is used to support the work their traders carry out. They employ hundreds, or even thousands of factors to assess a trade. Some forex trading robots are scams. They are marketed with a viral advertising campaign, and the website disappears a few weeks later.
These types of software useful for those with a technical trading strategy. Instead of spending hours analysing, you could have the software do it for you, and trade automatically. This also means that you aren’t limited by sleep. You could set some parameters and trade 24 hours a day.
Most mainstream forex trading robots are ineffective because they have a “one size fits all” approach. High-level traders develop their own forex trading scripts. This is simpler than it sounds. All you need is to sign up to a broker which supports MetaTrader. You will then need to learn how to develop MQL scripts. This enables you to apply your own trading strategy, and experiment using a demo trading account. Consequently, you will be able to test in a live trading environment.
Obviously, top traders are highly secretive about which forex robots they use. They don’t want to lose their competitive advantage. Moreover, a forex robot should be part of your strategy, but shouldn’t be the only way you trade. This is because there are other factors which determine the direction of a currency pair besides technical analysis. For instance, political unrest or election results can affect the value of a currency. Therefore, you will need to predict the outcome of other factors to stay one step ahead. This will require more manual analysis.
Humans are always looking for the easy way to wealth. Anyone with software which conducts profitable trades 24/7 won’t sell it online. They will simply sell all their possessions, and even take out low-interest loans to invest with. They would be confident of a return. That isn’t to say that forex robots don’t work. They work when combined with solid forex trading principles which are easy to learn.
Even the best forex traders believe that they don’t know everything. They are always looking for ways to improve their strategy. Any “guru” you come across online who suggests that their approach works “100% of the time” is a scammer. Even Warren Buffet makes bad deals; however, over the long term, he is right more times than he is wrong. If he had a 100% foolproof trading system, he would be by far the world’s richest man. He would certainly not sell it online.
Saying this, you can take lessons from courses and books to feed into your own trading strategy. A piece of software or strategy can work over the short term; however, without a solid knowledge base, you would struggle to adapt. As a result, you could lose profits in unfamiliar trading situations.
The beautiful thing about trading forex is that there is a new opportunity every second. And you don’t have to make a lot of successful trades to make huge profits. The best forex traders delve deeply into 3-5 currency pairs. Therefore, if one currency pair isn’t showing the signals they want, they simply analyse another one. Forex traders seek opportunities. Some wait hours before making a trade. Patience is your greatest asset.
A good rule is to invest what you are willing to lose. Elite traders have excellent money management skills. They are strict about how much they invest each day. The moment you begin to deposit more money just to chase losses, you are into gambling territory. Gambling isn’t an effective long-term trading strategy. A good money management strategy enables you to withdraw winnings at a consistent rate. This is a key part of trading forex. During exceptionally volatile periods, a large chunk of your profits can be lost.
The fact is you are unlikely to make a profit trading Forex. The statistics are against you. This is because most human beings are lazy. We get excited about something and then quit. If we remain committed and push through challenges, we are more likely to succeed. Simply sticking to your goal for an extended period can put you ahead. It doesn’t help that Forex is marketed as an easy way to wealth. As a result, people sign up and expect to get the Lamborghini and mansion promised by their “guru”. Notably, they don’t take the time to assess the unique factors affecting their chosen currency. As a result, they are set up to fail.
To conclude, some Forex robots work; however, they are part of a bigger trading strategy. They help to validate assessments and conduct technical analysis much more quickly than a human. Notably, banks and hedge funds have their own automated trading systems, yet they also employ traders. You need to take fundamental analysis into account, plus the geopolitical factors affecting a currency pair. This enables you to make more profitable trades.