What Is a Forex Trading Bot or Robot?
A forex trading bot or robot is the colloquial term for a software program based on foreign exchange market price movements that signals traders to buy or sell at a given point in time.
These systems can be automated and can be integrated with online forex brokers or exchange platforms.
* Forex trading robots are automated software programs used to generate trading signals in FX markets.
* Forex robots are designed to remove the psychological element of trading, which can be detrimental.
* While forex trading robots advertise the prospect of profits, it is important to remember that they are limited in their
capabilities and not foolproof.
Understanding Forex Trading Robots
Forex trading robots are automated software programs that generate trading signals. Most of these robots are built with MetaTrader, using the MQL scripting language, which lets traders generate trading signals or place orders, and manage trades. Forex robots are designed to remove trading’s psychological element, which can be detrimental.
Automated forex trading robots are available for purchase over the internet, but traders should exercise caution when
buying a trading system this way. Oftentimes, companies will spring up overnight to sell trading systems with a money-back guarantee before disappearing a few weeks later. They may cherry-pick successful trades as the most likely outcome for a trade or use curve-fitting to generate great results when backtesting a system, but these are not legitimate systems for assessing risk and opportunity.
Another criticism of forex trading robots is that they generate profits over the short term but their performance over the long term is mixed. This is primarily because they are automated to move within a certain range and follow trends. As a result, a sudden price movement can wipe out profits made in the short term.
In general, many traders try to develop automated trading systems based on their existing technical trading rules. Some of these systems are more successful than others. An example might be a trader who watches for breakouts and has a specific strategy for determining a stop-loss and take-profit (T/P) point. These rules could be easily modified to operate in an automated fashion rather than being manually executed. Traders should keep an eye on these systems to ensure that they’re working as expected and make adjustments when necessary.
A forex trading robot, can be programmed to trade constantly, 24 hours a day, seven days a week. However, allowing this level of ongoing trading potentially removes the investor from the process. Many investors may prefer to be more active participants in the trading process.