Forex Trading Robots Secrets
March 11, 2011 by James Greigg
Filed under Featured
Forex robots are emotionless machines which are able to analyze the numerical data on hand and make a decision about what the market is likely to do next. The more complex forex robots can scan thousands of different data types to arrive at a statistical conclusion on whether to buy, sell, hold or stay out of the market altogether. This is why Forex robot softwares are making waves in the forex industry: by enabling amateur traders to make money without having the years of experience and training that traditional traders have.
A forex robot could help you make money or improve your trading by removing the emotional element when it comes to forex trading. However, before you race ahead and buy a robot you first need to understand how they work and how they can help you.
Sometimes you will see forex robots referred to as Expert Advisors or EA’s.
This is in reference to the name given to robots by a popular forex trading platform. Essentially forex robots are like Expert Advisors because like Forex experts, they can tell you which currency to trade, when to get in and when to get out; some robots can even execute these trades automatically if you let them and it can work in the background unsupervised, although not everyone is comfortable with this!
Knowing when to exit the market is as important as knowing when to enter the market so that you maximize your profits while minimizing your losses.
If you choose to be notified of each trading opportunity then you can choose to receive audible alerts on your computer, an email notification or even a text message. The problem with reviewing the data before making the trade is that you might not get the best price possible or you might miss the ideal entry point.
Once your trading position is open, an advanced forex robot can modify the trade automatically to scale in and out of positions, monitor the risk second by second, trail stops and calculate the best exit point based on dozens of data sources like Fibonacci arcs, pivot points and so on.
You can even apply your own money management requirements into the robot so that you can tailor the robot to suit your trading style which is very useful if you have a proven track record of manually trading and want to automate your system to free up your time. In this case you can set profit targets, manually set an exit point or stop loss etc.
One critical thing to be aware of (if any), is that a lot of forex robots run on your desktop and require an Internet connection to monitor and make trades. Supposing that your internet connection goes down or your computer crashes, then there is no way for the forex robot to continue making trades. For this reason many people opt for the security of a virtual server which can avoid the problems you might have on your desktop PC.
Regardless of the past performance of the forex robot you should always maintain strict money management controls so that you are never overexposed or at significant amounts of risk. If you are planning to let your forex robot trade automatically, then it is wise to set very tight money management controls.
One of the biggest reasons people fail to make money with a forex robot is because they allow complete autonomous control without the strict money management policies in place. The best approach used by the most successful traders is a combination of automated and manual overseeing.
