This article will explain what forex trading robots are, how they work, how they can be potentially beneficial for your trading (by offering an automated alternative to traditional, manual trading), as well as some of the potential downsides of FX bots.
- A type of automated trading system
- Performs trading actions for you
Put simply, forex robots (or automated trading systems) allow you to trade on the financial markets without having to dedicate the same amount of time into monitoring and managing trades during a trading session.
This is made possible through automated trading (i.e. forex bots). These ''robots'' are a type of a computer program that utilizes forex trading signals in order to assess whether or not it is time to buy or sell a forex currency pair, during a particular time period.
How do automated trading systems work?
- Automated systems can achieve much more than humans are physically able to do
- Forex automated robots work with specific parameters
- You can potentially locate profitable trades in unstable markets
- Automated systems work best when they are tied to a positive trend
- Forex robots can trade for you 24 hours a day
There are many different types of automated systems available in the market, some of which are able to scan a large amount of charts in a manner that humans are not physically able to, so the potential for traders in this regard is very promising in terms of what can actually be accomplished.
Additionally, many of these systems are designed with specific parameters that are required to make trading decisions. The very best trading robots are able to make suggestions for potentially profitable trades that the trader can make, and they can even locate them in an otherwise unstable market, regardless of whether or not the direction of the trend in the market is clear or not.
Furthermore, most fx robots tend to trade in a specific range. Within this range they accumulate a certain amount of pips in the tight range, typically at the period when the forex market is moving at its slowest, and will also usually have a few pip targets set as well.
It is important to note that any profits made during this period can be completely wiped out if a strong range breakout happens in the market. Forex robots tend to work best when they are following a strong trend, particularly with a positive trend.
Moreover, if you have a trading strategy that's very straightforward and doesn't require continual monitoring or intervention, you can make the forex robot perform all of the work for you, and this robot can perform these actions 24 hours a day, whenever trading windows are open.
Automated trading with a demo account
Trading is a risk, and the use of forex robots is another risk that can potentially bring you a certain amount of profit. But considering the fact that they are limiting and should be used as part of an existing trading strategy, isn't it best to test out the software first? To see how it fits into your overall strategy?
With that in mind, why not open a free demo trading account on the Metatrader 4 trading platform with MTrading, so that you can test out automated trading before you enter the live markets?