Do forex robots work – 5 tips before you start

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Do forex robots really work? The million dollar question! Many forex traders are desperately looking for quick profits and think forex robots can help them. But which one works and where to purchase it. In this article we will try to help you making a smart choice. 

What are forex robots

A Forex robot or Expert Advisor (EA) is a computer program that opens and closes trades in a forex trading account fully automated. The trading software uses data from a trading platform like MT4 or MT5 and calculates when it should enter or exit the market. A robot is always based on rule based trading. The big pro of automated trading is the fact you completely rule out any emotions, one of the key reasons why retail traders lose money. Most forex robots can be adjusted in terms of parameteres such as take profit, stop loss and lot size. The typical programming language in which forex robots are programmed is MQL language, developed by Metaquotes (Metatrader 4). Other popular programming languages are Python, Pinescript and cAlgo. 

Where can I find a well performing robot?

There must be hundreds of Forex websites that offer trading robots. The general idea you get after visiting one of these sites is “it looks too good to be true”. Profits of 1000% in a month are unfotunately not rare. As if anyone would even consider to sell a forex robot like that!

Seriously, if it looks too good to be true, it probably is..

We recommend the MQL market place where you can find thousands of Expert Advisors. Prices vary from $0 to $10.000. What is interesting in this market place are the comments by its users/buyers. This will give you a pretty good idea of how the Expert Advisor works. 

We found some other interesting forex robots / trade managers, go have a visit;

www.scalprobot.com
www.metagrid.com

In case you like to purchase a robot from the internet, make 100% sure that the reseller is showing verified data. Demo track records or live records from dodgy brokers will only cost you money. 

Which types of forex robots are there?

There are a few types of popular types of forex robots.

> grid trading robot
> price action robot
> trend trading robot
> scalping robot
> swing trading robot

Since forex traders love some action, the grid trading robots are by far the most popular. Once installed and running on an M1 chart the chance is big you will see  the first trades popping up. They typically trade often and enter buy and sell order in the same pair at the same time (hedging). Disadvantage is that these robots keep on trading and like to add to open positions sometimes with an increasing lot size (Martingale). 

The price action robots are more sophisticated to manage yourself. These strategy try to enter trades is prices are moving either up or down. Very suitable to use these bots during news events. To trade a price action bot in full auto mode can be  tricky, since its hard to tell (calculate) if price action is real or fake.  We do have a free for testing price action ea, so feel free to try it!

A trend trading bot is not too useful in my opinion. The usually trade not so often and you don’t need a bot to determine the trend.

Scalping trading robots are very popular and we recently added one in our market place. If you like to trade very short term and aim for small profits then scalping is your thing. These bots try to minimize market exposure by taking very small profits in a very short period. 

Swing trading is very common amang stock traders. Usually driven by moving averages they try to “ride the waves” of the market and enter when markets retrace of pull back. We do have a very well performing swing trading robot in our market place, feel free to have a look. 

How do I create a forex robot?

To create a forex robot you need to have programming skills. Since the learning curve is rather long, we recommend to pay a vist to either the MQL website or fiverr.com where many EA developers offer their service. Since most forex traders use the MT4 or MT5 trading platform the computer language being used is called MQL. Its a stable language and offers all you need to create your own automated trading strategy. The avereage price for creating a forex robot is between $200 and $500. Make sure you test the strategy in the strategy tester of your trading platform, since many developers do not check the EA for bugs. 

Pros and cons of forex robots.

Advantages

1. It trades 24 hours per day.

2. Is saves loads of time and agony. No more screen time all day.

3. It trades without emotions such as fear and greed. 

4. Robots are easy to configure. 

5. Forex Robots can anyalise data or prices much faster than humans.

6. To trade with forex robots you don’t need any experience. 

7. All trading is rule based sort of like a professional trading plan. 

8. With a forex robot it is very easy to trade multiple currency pairs at the same time. 

Disadvantages

1. To trade a robot your trading terminal needs to be ON constantly. For this its recommended to you a Virtual Private Sever (VPS) which will cost around $10 monthly. 

2. Robots do not have an eternal life span. Software is coded based on historical data. This means that if market conditions change so does the sript. Unfortunately if this happens you most likely will be too late. 

3. A robot does not read the news. Therefore its always recommended to keep an eye on the market and not getting exposed in high volatile markets (such as the Brexit for example).

4. Too many scammers are active in the EA market, which makes it hard to find good robots. To create a robot will cost you time dearly and for this you need to have trading experience. 

I want to buy a forex robot, now what?

I don’t like to disappoint you, but 95% of all forex robots out there will not generate any consistent profits for you. In other words,  they suck and will only cost you money. Just ask yourself, why would someone sell a piece of software if it achieves 100% monthly profits? Exactly, it is ridiculous. 

Now many EA developers still have good intentions, however the trading rules on which they based their strategy can be considered toxic. We call them Martingale strategies, meaning they will probably blow up your account over time. I’d like to point out that robot trading absolutely beats manual trading, however one should consider a robot more like a trading tool to make trading easier and faster. Managing your forex robot will always be the case!

If you still decide to purchase a robot, make absolutely clear that the reseller shows you verified and live trading results. Login details of a trading account are also helpful to study the EA’s performance. 

Is my broker choice relevant for using forex robots?

Definitely! You want a broker that we call EA friendly. This means it offers true ECN and does not widen spreads at their convenience. How to choose a forex broker is not easy and needs your attention since it can make a day or night difference.  

5 tips before starting to use forex robots

  1. Make sure your broker is EA friendly (good execution and spreads).
  2. Always test a forex robot in the strategy tester or in a demo account.
  3. Do your due dilligence before purchasing a robot from the internet.
  4. Find a good VPS provider that offers 99.9% uptime.
  5. Never ever believe a back test that you see.

How to start with using a forex robot 

Why is it that so many robot users still find it difficult to make consistent profits. The answer is simple; their perception of a trading bot is wrong. A bot is not a plug and play device and needs to be monitored. Therefore one should consider to start with a semi automated forex robot. It’s a lot easier to set up and you don’t need a VPS. The advantage is that you prevent from trading during the night and thus you have less risk exposure. 

Markets change constantly but the code written by the robot developer not. This means that you should always consider to change the parameters or inputs while using the bot. In case you are interested in such a strategy you can try it in a demo for free by clicking here.

Conclusion

Although we are strong believers in algorithmic trading, we also believe that an algo (EA) performs better when it’s being managed by it’s developer. Therefore we do think that most forex robots aka Expert Advisors purchased on the internet will not work. A semi automated bot is absolutely worth a try. If you are interested in algorithimic trading, feel free to sign up for a free trial and see how it performs. 

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