The forex market is quite dynamic and keeps fluctuating all the time, which makes it difficult to predict and execute trades. A trader has to keep an eye on a large number of major currencies and now, with the booming crypto trading, it is much harder to predict the market accurately.
Forex trading using robots is increasing despite the few challenges new users might experience. It is the most recent trend the financial markets are experiencing where automated systems are used to make and execute trading decisions. Because the technology is still new, many forex traders are yet to decide whether robots are a viable option for harnessing the benefits of forex trading.
Trading Strategies Used by Forex Robots
Robots use a platform known as Expert Advisors and abbreviated as EA, to generate indicators and customized scripts. These indicators and scripts are what help a robot to generate signals that it acts upon when executing trades. This is one major reason why traders who want to dive into automated trading should carefully choose the best Forex EA for the most accurate outcomes.
Once a trader buys or acquires a free robot, they must first code them because their functionality depends on the coded instructions. It is important to note that the process used to create an automated system for forex trading is what is called EA programming.
The old methods of EA programming mainly use two types of coding languages – the MQL4 (Metaquotes Language 4) and the MQL5 (Metaquotes Language 5). These methods are not easy to learn and use, but expert programmers execute the codes fast.
Once the EA has been successfully programmed, it is installed in the trading platform, also known as MT4 (MetaTrader 4), where all market monitoring and execution is done. When a robot is operating on the MT4 platform, it can scan large volumes of data and signal opportunities for profits using its technical indicators.
A robot has two options to act depending on how it has been programmed. It will either send recommendation signals to a human trader or it will automatically open or close a trade without any human assistance.
Because the forex market is growing fast, it is possible to buy programmed best performing EAs from coders or traders. These EAs use EA generators to enable non-programming experts to program forex robots and generate trades on MT4.
Should You Use Robots for Forex Trading?
Forex robots can be programmed using two automated trading methods, namely full automation and semi-automation. Under full automation, the robot is set to predict the market and carry out trades automatically without requiring a user to approve. By programming a robot to full automation, users get several benefits.
Users do not need to be present all the time to study the market and click on buy or sell buttons whenever an opportunity arises. A program can detect opportunities faster than human beings and execute them at speed. The program eliminates emotions that often lead to fatal human errors during trades.
The next programming method is semi-automation, where a robot is programmed to generate leads but not to execute trades. It instead sends signals to the user who decides to take action or not.
There are advantages of using this method because the program does all the hard parts of scanning the market and the user only waits for a signal to act. However, the user has no option but to sit there and wait, and thus they have less freedom.
Advantages of Using Forex Robots
Non-Stop Trading
Human beings have many limitations and many issues to attend to, but robots work on programs and do not stop working unless they are programmed to do so. A trader can trade24 hours a day and seven days a week, thereby increasing chances for profits.
Greater Accuracy
Robots are machines and once programmed, their possibility of making errors is very minimal. Programmers test the system to ensure they have no bugs that would hinder their functionality. Although they depend on human intelligence to program them, they have far much better accuracy compared to their creators.
No Emotions Involved
The human brain is highly creative but the heart often hinders its creativity due to emotions. If the heart is removed, the brain can work with great accuracy but since this is impossible, traders entrust robots to do trading on their behalf because they do not have emotions that would hinder decision-making during trades.
They are Faster
Speed is crucial in forex trading because delays within a few seconds can cost a trader a significant loss. Robots act with speed and can execute a trade in a matter of milliseconds and save traders chances of making losses.
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