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What Role do Robots Play in Forex Trading?

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The global foreign exchange market, or forex, is a heady mix of numbers, gains and losses. Like in every area of trading, different people have different methods they employ to try to break even or make a profit. For some, this includes watching market fluctuations and making their best estimate on when to execute a trade, while others set a target number and align their trades accordingly, sitting back and letting their market call do the work.

This is all well and good for seasoned traders, experts with 10,000 hours of trading experience behind them and ample time to make their moves, but an increasing number of amateurs are now also looking into forex markets, and they have nothing like that experience. For such hobbyists, a range of resources and tools exist, from online academies to forex robots.

Photo: Unsplash

Naturally, with any financial instrument, there is always the chance of losing money. When there are potential profits to be made, there are also potential losses, which is why financial decisions should never be rushed. As a rule of thumb and general precaution, anyone participating in forex should seek independent financial advice to be sure they are making an informed decision before they head down such a new route.

At the same time, online forex trading is increasing its pull on those with an interest in finance and perhaps even an ambition to supplement their income. Up until recently, your only option if you were not a professional trader was to work with a brokerage firm who would execute trades on your behalf, either trusting them to trade with your capital or providing detailed – even real-time – instructions on which trades to execute and when. Just as technology and the internet have changed the way we complete a variety of activities in the 21st century, though, it has also had an immense impact on forex trading as well as trading as a whole.

Forex robots grew out of the early Automated Trading Systems (ATS) of the mid-20th century. As technology and trading techniques evolved, we find ourselves today presented with a variety of forex robots, often available to not just professionals but traders of different types. Put simply, forex robots are software that automates the carrying out of trades on behalf of human traders. Employing algorithms to assess market data second by second, they are able to make near-instantaneous moves to take advantage of any developments in the market, always according to the limits and preferences specified by the trader themselves.

Photo: Unsplash

There are a number of different trading robots available on the market, each with its own benefits and shortcomings. Meanwhile, automated forex trading using a robot presents some unique advantages to participants in itself, including increased consistency, discipline and potential for diversification. At the same time, this is not a fully automatic process, as monitoring and tweaking are still expected on traders’ part, in order to ensure smooth functioning. This relies on financial consideration of the markets and not technical skills, though, since trading robots do not require any computer programming experience and are instead designed for end users to use fairly intuitively.

As with many things in life, finding the best forex robot to suit your needs requires some research. By gaining an understanding of what makes a high-quality or a sub-par forex robot, you can make an informed choice on which you think could give you an advantage. There are a number of areas to look into, but key among them are backtesting (how the system copes in different circumstances), order size limits (max/min to be traded and how varied these can be), and overall system credibility (reliability of the robot, including uptime). Of course, there are pros and cons to any trading strategy, whether you employ robots or not. After all, there is no sure-fire way to make a profit on every single trade; that would be impossible.

With the forex market turning over a reputed $6trillion, growth reaching 40% daily over the last decade according to figures published on AsianBankingandFinance.net, there is little sign of any slowdown in this sector – and alongside it, tools to aid it, including trading robots. Indeed, we can expect the most reliable forex robots to be with us for many years, their algorithms improving and updating to be ever more accurate, and the competition in the marketplace only increasing, giving potential investors all the more options to consider.

RuSSali

RuSSali is a writer, online marketer and part-time graphics designer with a background in Finance. A regular contributor to Speaky Magazine and Tech Magazine. His real passion, however, lies in helping his clients.

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