At a time when Automated Forex Trading largely dominates financial markets, it is normal for individual traders to ask themselves a certain number of questions! Everyone wants to know if making money with a free or paid auto-trading robot is possible! This is why we discuss several themes linked to the Robot Bourse with you in this article. We will discuss algorithmic trading, including binary options scams and high-frequency trading, which are possible only thanks to robots.
What is Automated Forex Trading?
Automated Forex Trading is an automatic trading software that places orders on the forex market. According to the programming code given to it, the robot trader is capable of trading, opening, and closing trading orders 24 hours a day, according to the strategy written in its source code.
How can One Choose the Best Trading Robots?
MetaTrader expert advisors on the MetaTrader 4 and MetaTrader 5 trading platforms are the most used trading robots. MetaTrader robots give trading signals and execute market orders automatically.
Many companies create and sell forex robots. If you want to buy a robot, be careful. There are many miracle robots on the market with a guaranteed return, and the sites that sell them disappear after a specific time once they have sold a large stock of software.
A prerequisite for choosing this EA (Expert Advisor), the name of the trading robots on the MT4 and MT5 platforms, is to have a solid knowledge of trading and behavior of the financial market on which you wish to speculate or invest using an automated forex trading.
Here are the 5 Criteria to meet the Forex Market Robot:
- Have advanced trading knowledge
- Be aware of the danger of over-optimization (avoid the parameters of the trading robot being too optimized for a particular period)
- Know the exact details of the automatic robot operation and strategy
- Being able to back-test the Forex trader robot
- Being able to test the Forex bot in real conditions on a demo account
Secondly, it can be helpful to compare several EAs to determine the best robots. For this, it is necessary to know how to evaluate the value of Automated Forex Trading properly.
How to Acquire a Forex Trading Robot?
As you know, there are many forex robots on the internet, some paid and some free. Finding the best trading robot for you is no easy task. This is why it is necessary to know the possible and relevant points of comparison to evaluate the value of one forex trading robot compared to another!
To answer this problem in a simple and precise way, we must separate two cases:
The Purchase of an MT4 Trading Robot
Unfortunately, in this case, you can only refer to the testimonials of other EA users, assuming that the comments on the internet are honest feedback from other traders. This is why purchasing an expert forex trader is more complex, except when testing the robot trader before purchasing is possible. In this case, the evaluation of the EA will be the same as when testing free EAs downloaded from the internet.
Download Robot Trader free
Downloading a free Forex robot is, by definition, simpler and more attractive; however, you should know that many EAs present on the internet are over-optimized to give good results over a well-defined period like Forex robots with sales to justify a high price.
How to Test Trading Robots?
Here is the leading information to compare between the different Expert Advisors that interest you on MT4:
The Number of Positions
Suppose your broker charges commissions when entering and exiting your CFD trading positions. In that case, the number of trades taken using a free trading robot counts because the more positions it takes, the more commissions you will pay!
With a broker like Admirals, the trading robot can take as many positions as it finds signals on the CFDs without being inconvenient about the fees to be paid because only the spread counts at Admirals; there are no commissions on entering or exiting a position.
Consecutive Gains and Consecutive Losses
It is essential to know how many losses the Automated Forex Trading is likely to take and how many winning positions in a row it is possible to generate—this way, you will know what to expect with the EA generally.
Reminder: We remind you that historical data does not represent potential future losses or gains but only serves as a reference!
The Average Loss and The Average Gain
Knowing the average loss and gain amount allows you to calculate the potential risk/gain ratio per position on many trades. This ratio should preferably be greater than 1.
Maximum Loss and Maximum Gain
Being aware of the maximum losses and gains allows you to ensure that the risk you are willing to take per trade is respected.
The Success Rate
This data will immediately tell you if the CFD trading robot takes winning positions more often than losing ones. A success rate greater than 50% is a good start, and you must ensure that the risk-to-gain ratio per position aligns with the success rate.
Here are three examples of winning statistics for a MetaTrader Robot:
- 70% good positions but a ratio of 0.8
- 50% good positions but a ratio of 1.5
- 30% good positions but a ratio of 4
In these three configurations, the MetaTrader 4 robot makes money; the only difference will be the personality and psychology of the owner of this MT4 trading robot.
How do you create an Automated Forex Trading Setup?
The finance industry is recruiting many programmers because trading is done by trading machines, which are much faster than human operators.
There are two ways:
- Create and program your EA yourself
- Hire a professional coder
If you opt for the first solution, know that you will need:
Learn the computer language of the trading platform you are using
Some trading interfaces have simpler and easier-to-learn programming code than other trading stations. The language on MT4 is relatively simple to learn, and there is a lot of online documentation to help you succeed in programming your Expert Advisors. The MQL5 site is particularly full of beneficial information!
Do a lot of Trials and Practical Tests
Once the code is registered on the platform, you can test historical data with the MetaTrader strategy tester.
How Does an Automated Forex Trading Work?
It’s straightforward: The Forex trading robot, also called Forex Auto-trader, will execute the lines of code that the programmer has inserted into the EA. Like any computer program, a high-frequency trading robot or stock market trader robot is based on lines of code written in a particular programming language.
For example, if a trader hires a programmer to create a custom trading robot based on:
- a position is taken with a crossing of two short-term moving averages
- a trend filter with a long-term simple moving average
The coder will enter the following conditions into the MT4 robot code:
- Look for a buy signal if the price is above the long-term simple moving average
- Take a long position if the first condition is met and the two short-term moving averages cross upwards
- Look for a sell signal if the price is below the long-term simple moving average
- Take a short position if the third condition is met and the two short-term moving averages cross downward
Many want to use a trading robot to make money quickly and easily in forex. Nevertheless, it must be understood that forex trading robots are developed with particular parameters needed in quick trading decisions. Using precise trading signals, they determine when it is appropriate to trade or, on the contrary, not to trade.
If conditions change, the robot instructed to interpret the market in a certain way will probably have more difficulty being profitable, which is not insignificant.
As you understand, it is essential to note that all forex trading robots trade in a particular market configuration and have difficulty adapting to trends. Thus, we can find robots that work well in a trending market but lose a lot in a range and vice versa. Most modern robots are based on artificial intelligence mechanisms and try to adapt to market conditions. This type of robot remains very expensive and very difficult to find for individuals.
The best automated forex trading will have solutions for dealing with unstable markets or when the trend is unclear. The majority of forex trading robots follow the trend to amplify profits. However, it should not be forgotten that trading against the trend can lead to many losses.
Which Brokers allow you to use the Trading Robot
You should know that not all CFD brokers authorize automatic robot trading software. This is not the case with Admirals, where you can use your free or paid robot trading software. If you have a forex trading robot, do not hesitate to test it on a demo account before launching it on a real trading account.
Whether on an MT4 or MT5 trading account but also on:
- a standard Admiral account for CFDs
- An admiral investment account for stocks
- a limited risk Admiral account
- or an Admiral Prime trading account
using a forex trading robot is possible and simple. In addition to authorizing and facilitating robot traders, Admirals provide ideal trading conditions for EAs, such as the absence of commissions when entering or exiting each position; only the spread counts. In this way, you can be assisted in trading with a forex robot and ensure its proper functioning regardless of the financial market that interests you.
MetaTrader – Best Trading Robot41
For those who don’t know yet, MetaTrader is a trading platform for forex, indices, commodities, stocks, and bonds, on which you can do automatic trading. Automatic trading (the real thing, not the scams of binary trading robots) is difficult. You need programming knowledge to create an automatic trading robot. If you don’t know how to program, you can call external service providers, who can program robots for you according to your needs.
In the MetaTrader 4 platform, robots are called Expert Advisors. An Expert Advisor program can be added to MetaTrader and can trade independently if automatic trading is checked on the platform. You can find many free and paid expert advisors on forex forums, but be careful with turnkey trading systems.
Before letting your automatic trading software run on your real account, it is wise to test it on a demo account. This will allow you to see how it reacts in different market conditions, identify execution issues, avoid settings that can generate significant losses, etc. In any case, expert advisors need the MetaTrader platform to function. Very often, investors buy a VPS to install the trading software.
The VPS is a virtual server that is always on. This way, the automatic trading program can work all the time. VPS is relatively inexpensive, at around 15 euros per month. The advantage is that the MT4 and MT5 platforms stay on, and automatic software can follow the markets.
Robot Trader Stock Market Categories
Robot traders can be classified into several categories:
Depending on the market:
- Forex Robot Trader
- Binary Options Trader Robot
- CFD Robot Trader
Depending on the platform:
- Expert Advisors MetaTrader
- Other platforms
Depending on the investment horizon:
- Forex scalping robots
- Long-term trading robots
- Binary options robots
Based on the analysis of the automatic trading software:
- Technical analysis
- Economic news
Expert Advisor for MT4 and MT5– Advantages
The advantage of automatic trading on MetaTrader is that MT4 and MT5 have a gigantic base of expert advisors available for free and
providers who sell their robot traders. Trading robots on MT4 or MT5 are expert advisors developed in the mql4 or mql5 programming language with the following advantages:
- timeliness
- impartiality, no hesitation in decision-making
- flexibility of trading hours: The Forex robot will not tire after many hours active on the market, unlike the trader
The advantage of automatic trading is that there is no human being and all his psychology behind the stock market orders. An expert consultant has no regrets once he closes an order or when he makes a loss. And the trader’s psychology can play more than one trick on him.
Speculating and investing in currencies requires much composure, and robot traders fill this gap. In a market as volatile as forex, beginner’s mistakes or psychological thrills can play many tricks on you. An expert advisor will not have these kinds of problems.
Winning robots are programs that learn from their mistakes and look for precise signals in the market. Big banks and investment funds have armies of programmers who work all day on these automatic tools.
Expert Advisors MT4 and MT5 – Disadvantages
Automatic trading software also has some disadvantages.
In finance, past performance does not guarantee future returns. If you test an expert consultant for some time and he performs well in a trending market, you will be delighted with his results. If the market becomes a little more indecisive and becomes a range, your expert advisor will start making losses. At this stage, trading robots do not have artificial intelligence to adapt to market conditions, especially software you will buy for 200 euros on the Internet.
Robot traders cannot replace human reasoning. While automatic trading software simplifies calculations, no program can replace human intuition. If you want to try automatic trading, try an MT4 demo account.
Bottom Line
We hope we have helped you formulate your answer to the question: How to Choose Your Ultimate Trading Robot? Winning forex trading is based on knowledge, skill, rigor, and patience. When studying automated forex trading, it is clear that they cannot operate autonomously for the most part. Market conditions tend to change constantly, and only an experienced forex trader can distinguish when to enter the market or stay away. If you want to test trading robots, you can do so on the MetaTrader 4 or MetaTrader 5 trading platform to form your opinion.
