What Are Forex Trading Robots

Trading in the Forex market can be a tough and challenging process. As a result, many novice traders fail to advance and become professionals. What’s more, there’s no single formula for success. You will meet all kinds of traders that are making profits on a consistent basis. Some prefer day trading, while others swing trade. Some place hundreds of short trades every day, while most prefer to position trade and open less orders. There’s a million ways to make money in the market. Unfortunately, all are very hard to find.

Trading forex with robots comes with certain advantages and disadvantages and we’ll talk about them in detail in this guide.

In addition, a vast majority of trades in the Foreign Exchange market are done using trading algorithms. If you are planning to trade Forex in the long run, understanding Forex trading robots is important even if you are not going to use them in your trading, algorithms play a large role in price creation.

Guide to forex robots

Trading forex with robots simply means that traders use algorithms that include predetermined trading rules for automating their trades. There are various trading algorithms developed over many years. Some algorithms manage to generate profits consistently, while others do not work at all. Some Algorithms work best in certain market conditions, for example, when price is in range. Some algorithms work best for trading certain currency pairs and so on.

When using Forex robots for trading, traders need to purchase or create trading algorithms that fit their requirements. Robots act as they’re programmed to act, and therefore, when they fail to generate satisfactory results, it’s the trader’s job to figure out where his/her mistake is. When creating these strategies, there are a couple of things traders need to indicate:

• In which price range the bot will be trading?
• Which markets will be covered by the algorithm?
• What will be the level of risks per trade?
• Which indicators will the bot be using?
• And the list goes on and on.

Traders can create trading robots by themselves, pay a professional to do it for them based on their own ideas or simply purchase time tested robots in the market. No matter which way you choose to acquire an algorithm, it’s recommended to test and backtest it prior to letting the robot trade live. Testing can be done by demo trading. Demo accounts help traders use virtual money and practice without risking hard-earned money. Demo trading accounts are offered by almost every broker for free.

There are both: paid and free automated forex robots on the market. Purchasing a paid version doesn’t mean that you are buying the best. There are many scammers in the world of finance. It’s best to conduct a little research on the trading algorithm you are planning to buy prior to making the purchase. When it comes to free trading bots, it might be hard to find the one that can do most of the work and also be reliable. These free bots are usually just free versions of paid pods, with very limited functionality. Keep in mind that some scammers make many fake reviews.

Should we use forex robots for trading? What are the advantages?

When it comes to the question of whether we should be using trading bots or not, it all comes down to personal preference. Trading algorithms bring certain advantages. First and foremost is that the algorithms are precise, they do not share human weaknesses. Robots do not feel fear, greed, need to revenge trade or other human emotions. Algorithms do not take day offs or get sick. What’s more, algorithms don’t get tired. They can be active all the time. However, many traders choose to program algorithms in a way that they are inactive during major economic announcements. And rightfully so, robots are bad at analyzing fundamentals, and we’ll expand on that in the disadvantages section.

Trading forex with robots makes the scanning process much easier. Humans can scan a limited amount of markets in search of trading opportunities at a given time, while robots can scan multiple markets simultaneously.

Understanding Forex trading robots is not an absolute must, however, learning about how they work and how they influence price creation can be beneficial for every trader.

In addition to all those potential benefits that were stated earlier, there is one more benefit to automated robot trading. It can save a lot of time for traders. Instead of sitting in front of their screens waiting for trading opportunities, algorithmic traders spend their time on analyzing and perfecting their trading algorithms.

Another advantage of using trading algorithms is that they save time and energy on testing and backtesting. Testing strategies in a demo means that the trading is done using virtual money and it takes more time to collect large amounts of data than in the case of backtesting. Backtesting means comparing your trading strategies with historic data. Backtesting using the robots is fast and very convenient.

And to answer the question whether we should use trading bots or not, it’s not clear. Some traders make good use of trading algorithms while others fail to do so. At the end of the day, it’s best for every trader to try them.

Risks associated with using Forex trading robots

Using automated forex trading bots has its advantages, but there are some risks associated with them too. The first and foremost disadvantage of trading algorithms is that they are purely technical. Robots cannot analyze economic and political news as well as humans can do. At least for now. Who knows, maybe an advanced artificial intelligence can emerge in the future that will make competing impossible, but for now, humans have an analytical edge over robots.

Trading bots automate trading, which might lead traders to become less experienced with charts. In addition, we’ve already mentioned that not all trading robots work. And the ones that work, do not work well for all markets, all the time. The reason behind is simple, every market condition is different. Price moves differently in a range than it does in a trend, trading activity and liquidity is different within a given time within a trading day and the list goes on.

Algorithms are programmed to do certain things, which means they fail to adapt to changing markets.

And lastly, we need to highlight the potential scams you might come across when looking for a trading algorithm. Sellers promise good-performing trading bots for cheap prices, but in the end people who purchase them don’t receive anything or receive very badly built bots that are guaranteed to make losses. To avoid getting scammed, it’s recommended to learn more about the sellers and bots before making a purchase. In addition, you should never use a new trading robot without testing it first.

Best Forex trading bots for MT4 and MT5

MetaTrader 4 and MetaTrader 5 platforms are among the most popular Forex trading platforms globally. Almost every broker offers them to their clients. The reason is simple, both platforms might look outdated, but they’re both very reliable and accurate. Both platforms enable traders to automate trading. MT4 was released in 2005 and MT5 followed 5 years later. The fact that both platforms are very old but still highly demanded in today’s world, has laid the foundation to creating a wide variety of trading algorithms. MetaTrader uses MQL4 and MQL5 coding languages for creating automated trading bots. MetaTrader algorithms are called Expert Advisors or EAs for short.

When conducting research for this guide, we took a look at the MetaTrader4 and MetaTrader 5 marketplace. The marketplace enables traders to purchase ready to use trading robots instead of building them on their own.

Matrix Arrow EA

Matrix Arrow is an expert advisor that can trade with Matrix Arrow indicators on the MT5. It can be operated manually or be fully automated. Using Matrix Arrow EA, traders should expect that this bot will spot upcoming trends in early stages. It uses 10 standard indicators to spot these upcoming trends. Among these indicators are ADX, CCI, MACD, and others.

This is one of the most trustworthy trading robots on the market, as it has more than 10,000 activations and a rating of 5/5. It is also on the cheaper side of things as it costs $125, which is low considering the prices of other similar bots. If you don’t want to spend this much money on the bot without testing it first, you can simply rent it for 1 month and pay $30. There are also 3, 6, and 12 month rent options available.

Gold Fever

Trading gold as CFD is offered by most Forex brokers. Gold becomes more interesting in the times of high inflation as investors use gold as a hedge against currencies and its price hikes.

Gold Fever is an algorithm that was developed to trade gold using MetaTrader platform. Please note that our goal is not to recommend you to purchase a certain EA. Our goal is to inform you about the EA marketplace.

When it comes to credibility, Gold Fever has 888 activations and a 4-star rating. The algorithm is pricier than Matrix Arrow EA and costs $299. On the upside, you can rent the EA for $59 per month. As you can see, a high number of activations and goor rating scores are highly important for choosing a trading algorithm that works.

The main takeaways

To sum everything up, there are many different traders in the financial industry. There are various techniques and strategies traders use in order to make money. Trading forex with robots is just one such technique. Robots are also known as trading algorithms that help traders automate their trading. Automated robot trading comes with certain benefits and risks. On the upside, robots do not get tired, sick, greedy, afraid, doubtful or nervous. Algorithms scan markets for finding trading opportunities much better than humans. In addition, robots save a lot of time on trading, testing and backtesting. On the downside, robots cannot analyze economic and political news as well as humans can. What’s more, algorithms are built for trading under certain market conditions and they do poorly when market conditions change. In addition, not all of the algorithms that are on the market work and you should be careful before making a purchase. MetaTrader platforms use MQL4 and MQL5 languages to create trading bots called Expert Advisors (EAs). Traders can learn to code and build EAs themselves, pay someone to create for them based on their own ideas or purchase EAs from MetaTrader’s marketplace.

FAQs on Forex trading bots

Do robots really work in Forex?

Yes and no. Forex trading robots are a good way to free up some time and let the robot handle most of the trading activities, but leaving them unattended for extended periods of time is unwise as market conditions often change and algorithms fail to cope with the changing environment.

How much is a Forex trading robot?

You can find Forex trading robots for completely free, but these bots will either be bad quality or have very limited functionality. Good Forex trading bots start around $100-$200, while top performing bots can sell for thousands of dollars. Keep in mind that there are some scammers in the market too and some of these pricey bots don’t work at all. You should always do your research and purchase from reputable sellers.

Can a Forex robot make you rich?

Answer to this question depends on many factors. Assuming you have a working robot that generates 10% return on investment annually, you will not get rich if your initial deposit is only 1,000 USD. Getting reach can be achieved by a good trading system (And trading using algorithms can be a part of your strategy), good starting capital is also required. In addition, to get rich, it’s recommended to compound your money, in other words reinvest your profits and make more money using more funds. Compounding is a tested and true way of getting rich.