The Truth About Trading Robots: Advantages and Disadvantages
Automatic trading systems known as Forex advisors or robots are very popular trading software, however, there are different opinions among market participants about the effectiveness of trading robots.
Some traders prefer to use Expert Advisors, as this can significantly save time and exclude the possibility of making a rash deal, succumbing to the influence of emotions. Other market participants prefer “manual” trading.
The truth about trading robots. Pros and cons of PBX
There are advantages and disadvantages to using advisors, which we will consider in this article. Looking ahead, we will say that there are more advantages to using robots. Often the reason for negative reviews about the work of automatic trading systems (ATS) is the inability of traders to choose the optimal EA model and configure it correctly.
The main advantages of using advisors include:
- Saving time – the trader needs to download, test the trading system, and then only occasionally adjust the settings: there is no need to sit all day at the computer.
- Improving the efficiency of trading and foreign exchange operations in the short and long term.
- Simplification of trade. EAs can take into account a large number of technical analysis features that are difficult to remember for a trader with little experience.
- The robot scans the market around the clock, having access to the Internet. At the same time, no intervention on the part of the trader is required to open or close orders.
- Increased income. Expert Advisors with different settings can additionally bring an increase to the deposit from 10 to 150%. The higher the risk, the higher the percentage.
- Emotional mistakes when making transactions are excluded.
- A huge selection of robots tailored for different trading strategies and currency pairs allows a trader to set up several systems. Moreover, each of them will be profitable.
- If configured correctly, the EA will not cross the risk threshold.
- The use of advisors does not exclude “manual” trading, which gives the trader the opportunity to take advantage of the program and participate in transactions where, in order to make a profit, it is necessary to take actions that are not prescribed in the program or opposite to it.
Disadvantages of using PBX:
The widest range of trading robots presented to traders often causes confusion.
Most of the available software will not bring the desired results, since it was initially created exclusively for “pumping” funds from traders, otherwise what is the point of selling the “goose that lays the golden eggs”?
Good historical benchmarks do not yet guarantee similar results in real-time.
The need to replace advisors. This is due to the fact that the program has a clear set of characteristics that become obsolete over time and are not suitable for solving modern problems.
The Expert Advisor does not know how to react to drastic changes in the market or news. He will continue to work according to the established algorithm, which may subsequently negatively affect the trader’s income.
What else you need to know about trading robots
Finding a profitable trading robot is not an easy task. From the available models, you need to choose several options corresponding to the strategic model used by the trader. After – test the software for efficiency using a tester program. You can use additional software or use a program integrated into the terminal for testing.
At the same time, it is important to understand that the cost of programs is not the same, and a higher-quality Expert Advisor with more functionality will cost more.
After receiving the performance report, the trader can choose the optimal model. You should check it using a demo account and only then start real trading. The first real account should be a cent one – this way there is less risk.
Many novice traders think that using a robot can make good money and spend much less time on work, but this is not the case. For the program to be profitable, you need to understand market trends, their features, and the principle of trading in the foreign exchange market. For this reason, it is advisable for beginners to spend time on manual trading and only after that resort to the help of specialized programs.
The information obtained during manual trading will help you choose the right settings for the EA and make its work as profitable as possible. In addition, do not forget that EAs can be focused on different trading strategies: flat, trend trading, salpingitis, and others.
As an alternative, it is worth considering independent writing of an automatic telephone exchange, optimized for the trading strategy used by a market participant. This practice is not uncommon for professional Forex traders.
The point is to transfer your own trading model to the language of the MQL4 program used in MT4. The program created in this way will be able to perform actions identical to those that are typical for the user in the “manual” trading method. At the same time, transactions will be carried out without reference to emotions, which will significantly increase trading efficiency.
It is quite possible to master MQL4 if you wish. There is a lot of material on the Internet that includes detailed instructions. Before buying or writing a robot, it is important for a trader to study the features of the software, make the necessary individual settings, conduct tests, and only then start trading on the real market.
However, it is important to understand that in order to create a high-quality program that takes into account all the necessary nuances, you must have enough knowledge and skills in the field of programming. For this reason, good, multifunctional robots come at a hefty price tag. However, with proper tuning, the cost is fully justified.
According to statistics, about 90% of successful traders resort to using ATS, but with all this, you should not assume that installing an advisor is a direct road to great profits. The Expert Advisor is always a part of a trading strategy, but it cannot fully replace the work of the trader himself in the market.
It is on the understanding of the market and the ability to feel it that the success of trading depends. For this reason, even the most successful traders continue to monitor the market situation and its changes. After all, tendencies tend to change, and the algorithm of the advisors’ work always remains the same.
It is also impossible to dispute the fact that market movements are often influenced by unexpected events or news that need to be understood. After all, an advisor is not artificial intelligence, its work is based solely on technical data analysis. And to make a profit, at times, you need a quick reaction and taking actions that run counter to the strategy originally set by the trader. In such a situation, the program will not help, and the trader will need to manually carry out the necessary operations.
The dynamics of the foreign exchange market also suggest that over time, the program settings will become outdated and simply irrelevant, which will entail a loss. To avoid this, you should be aware of events and periodically update the advisor’s settings.
The creation of your own program will be effective for traders who already have extensive experience in trading and a built trading strategy that brings them profit. In other cases, writing a PBX is impractical.
Summing up, we can say that Expert Advisors have more pluses than minuses. However, do not think that the profitability of trading depends solely on the robot. For truly successful work, it is important to understand the principle of the Forex market, monitor its dynamics, and keep your finger on the pulse.