Forex trade bot
Forex robots are automated systems that enter trade orders in the place of a human trader. They are programmed to generate returns by the application of mathematical rules which are decided by their creators.
In other words, the intelligence and skill of a forex robot is entirely dependant on its creator. The commands executed by the robot are based on the tools of technical analysis, but sophisticated programmers will also use back testing to optimize the results of their robots. This process can be automated itself, and involves tweaking of the program to ameliorate its performance with respect to maximum drawdown, the placing of stop-loss orders, and other aspects of money management.
There are important problems with the logic behind the creation of the forex automatic trading robots, and the actual results generated by them.
The first and obvious issue is the fact that the robots have never been tested in actual market conditions. In almost all cases, they are tested on historic data, and non-trade related problems, such as connectivity issues, or problems that originate from the broker which would not be reflected on market data, are ignored.
For example, even the best robot will be useless if during some inevitable technical problem originating at your local ISP a brief blackout wipes out your account. Similarly, if, for whatever reason, spreads of your own broker widen to levels much greater than that prevailing in the vast majority of the market, even the best automated system will be useless.
Only good money management methods, through the use of proper stop-loss orders, and preparation and willingness to admit and recognize losses can ensure survival against such periods. It is programmed to run according to a set of rules at all times, and has no ability to adapt itself to changing circumstances, regardless of the severity and importance of the changes in question. Not only will a robot stick to the plan and be disciplined, but a robot will always execute correctly.
This is a huge benefit in trading because mistakes like the ones mentioned are killers to your overall success. Robots can also take in more data than a human trader. That means, if your strategy applies to a whole bunch of different currency pairs, you can probably only monitor a few at a time. While you pick the few hours that work best for you, the trading robot will be plugging away at the markets 24 hours a day.
That is 3 , 4 maybe 10 times as much as a manual trader trades the market… Yet another advantage point for Mr. The human trader has been beaten enough; time for him to fight back.
Where a robot can only execute decisions based on the scenarios that programmed into him, a human can take into account everything that is going on and process it together. A human can decide when he has enough profit and when he thinks the momentum will continue in his favor.
So there are actually a lot of bonuses to being human—who knew?! But there are also bonuses to not having to think, not having emotions, not having a limit to the information you can process. So which one is actually better? Manual trading or automated trading?
These days, there is a lot of discussion about automated trading vs manual trading.