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Pros and Cons of Forex Trading with Robots Hey traders, Forex trading robots (EA) are commonly perceived as a sort of magic button. Once it is clicked, the system starts trading automagically, generating consistent profits. What can be better? However, many pitfalls are hidden behind its simplicity. In this educational article, we will discuss the advantages and disadvantages / pros and cons of trading with Expert Advisers (EA) / robots. Advantages of Forex Trading Robots Let's start with the positives ➕: 1. The first major advantage of EA is the fact that it works 24/7 , without delays and coffee breaks. Once it is launched, it will keep working till you stop it. 2. The second advantage of EA is that it is non-emotional and objective . It strictly follows the algorithm and rules determined by a program. It is not influenced by psychological biases, making each trade extremely precise. 3. The third strength of trading robots is the processing speed and its limitless scalability . EA can monitor dozens of trading instruments on multiple time frames simultaneously, not missing any bit of information. Hence, it requires less time for decision-making and trade execution. 4. The fourth advantage of EA is the simplicity of its backtesting . Once the algorithm is written and the order of execution rules are described, it can be quickly and easily tested on a historical data. Disadvantages of Forex Trading Robots So far, sounds like a panacea, right?! But now, let's discuss the negatives ➖: 1. Similar to any software, app or program, the EA is vulnerable to bugs, and may occasionally lag . Therefore, it requires a constant oversight and maintenance . In order to fix the bugs and maintain that, a high level of experience is required . One should have the advanced skills both in coding and in trading. 2. Moreover, admitting the fact that the market is constantly changing and evolving, one should regularly update the EA and adapt it. In comparison to humans, trading robots are not learning, they do not evolve, update themselves. 3. Leaving the robot without supervision, updates and patches, it may blow the entire account in a glimpse of an eye without any embarrassment. 4. One more important thing to add about EA, is the fact that it is technical analysis based . For now, there are no solutions on the market that would allow the integration of fundamentals in the algorithm. Unfortunately, most of the traders overestimate the strengths of trading robots, completely neglecting its obvious weaknesses. If you decide to apply EA in Forex trading, always consider its pros and cons that we discuss in the post.
OANDA:XAUUSDEducation
by VasilyTrader
1
Trading With Robots (EA) | Your Pros & Cons 🤖 Hey traders, Trading robots are commonly perceived as a sort of magic button. Once it is clicked, the system starts trading automagically, generating consistent profits. What can be better? However, many pitfalls are hidden behind its simplicity. In this educational article, we will discuss the advantages and disadvantages of trading with Expert Advisers (EA) / robots. Let's start with the positives ➕: The first major advantage of EA is the fact that it works 24/7, without delays and coffee breaks. Once it is launched, it will keep working till you stop it. The second advantage of EA is that it is non-emotional and objective. It strictly follows the algorithm and rules determined by a program. It is not influenced by psychological biases, making each trade extremely precise. The third strength of trading robots is the processing speed and its limitless scalability. EA can monitor dozens of trading instruments on multiple time frames simultaneously, not missing any bit of information. Hence, it requires less time for decision-making and trade execution. The fourth advantage of EA is the simplicity of its backtesting. Once the algorithm is written and the order execution rules are described, they can be quickly and easily tested on a historical data. So far, sounds like a panacea, right?! But now, let's discuss the negatives ➖: Similar to any software, app or program, the EA is vulnerable to bugs, and may occasionally lag. Therefore, it requires a constant oversight and maintenance. In order to fix the bugs and maintain that, a high level of experience is required. One should have the advanced skills both in coding and in trading. Moreover, admitting the fact that the market is constantly changing and evolving, one should regularly update the EA and adapt it. In comparison to humans, trading robots are not learning, they do not evolve themselves. Leaving the robot without supervision, updates and patches, it may blow the entire account in a glimpse of an eye without any embarrassment. One more important thing to add about EA, is the fact that it is technical analysis based. For now, there are no solutions on the market that would allow the integration of fundamentals in the algorithm. Unfortunately, most of the traders overestimate the strengths of trading robots, completely neglecting its obvious weaknesses. If you decide to apply EA in trading, always consider its pros and cons that we discuss in the post. ❤️Please, support my work with like, thank you!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
8
Do Robots (including Expert Advisors) work?> Robot you code yourself -> Risk Taking -> Market making/arbitrage In both cases the robot will likely not be overly simple. You will need to know a thing or two about programming. Learning to trade is like getting a degree, learning to code is like getting a second one. -> Risk Taking This may very well work. I do not know of anyone that does this and is profitable over more than just a few lucky months, but does not mean it does not exist. I have heard of people that tried it, even people that told me they would let me know how it went they swore they cracked it, have not heard a word since then. Also, myfxbook is full of automated systems that end up blowing up. If it is possible, you have to monitor the market all the time, be careful about events, look for evolving conditions. I do not see how a fully autonomous robot - you can go to holidays and come back and find money in your account - could be programmed. Would be so complex... Are there any profitable traders that are interested in this? -> MM & Arb There are plenty of hft and quant firms out there. Among other things they buy order flow from Robinhood and soon other "zero commission" brokers. Old market makers that did not want to move to algos just quit and did something new. I see them mostly as mm or parasites. They can be so anoying. I used to market make on crypto 2 years ago, the parasite would just jump in front me all the time. Any order I place he'd hop 0.0001 higher/lower. Front running bots. It's not all front running bots of course. Soros & Jim Simons (I think) run statistical arbitrage funds. Computer farms to treat a ton of data help. It works obviously. For stat arb you will need: Learn the basics about the market (6 month course), an intermediate programming degree (1 year), a statistics phd (8 years). Good luck. For market making you will need: Learn a bit more than the basics about the market (1 year, don't need the speculating course), a programming degree (1 year). I am being nice with the numbers I think. > Fully automated robot you purchase Pros and Cons Also, I don't even know how it is legal, it's pretty dangerous. They sell you some fairy dust and also you get advised to "hold on" "do not be emotional with fear just hold" "be strong during drawdowns they are normal" it's actually risible. New traders that might be a little gullible, a little greedy too will end up with some fairy dust that is guarenteed to bring their account to zero, they do not understand the markets, AND to top that, they hear that they should not panic about losses and just persevere because drawdowns are normal and they are just experiencing fear, this is what will make them lose, and this is what the robot is here to fix. "Just trust". What you have here is a recipe for disaster. > Robot that executes for you/semi automatic Why not? I see a few possible uses: - You want to buy alot of shares of a small company long term, you set a bot to purchase some each time the stock has a strong down momentum with volume (fills you without moving the market) - You want to sleep / take a few days off, you run an algo that will move your stop loss each time the price goes up, would not be too hard to say "use the smallest of EMA 20 0.236 ATR something else, if consolidates move closer, if price == .... then do this, ifelse the price surges then move my SL closer" etc. - You could have a feel for the market and be very bullish, just set a bot to buy an inside bar bull break with a couple of conditions, or a pullback of a certain % but still above a certain level/MA followed by a pin bar. Sets and trails the stop loss too until you intervene because conditions have changed and you do not want to stay in or whatever reason. - Big one: monitors correlations for you. I'd actually recommend that. A robot to warn you of your global portfolio correlation, maximum risk, and makes some recommendation (shows what are you most correlated positions making a problem, and lists stocks/currencies/futures that are uncorrelated or negatively correlated) > Robot that alerts you Plenty of people use that. Makes perfect sense. Something just warns you when the price does something particular or whatever. I myself mostly use trading view price alerts. I just set an alert on Bitcoin MA50 & MA200 makign a death cross, should fire up by Halloween. I would not go overboard on this for "advanced" things, because it could get complicated, and a quick glance is even better anyway, you want to focus on what pops out "obviously", you want to see what other people are seeing on the chart. You may want to be long on certain currencies, the bot could tell you when the price is starting a pullback... > Indicator (sold) There are people that dish out indicators and show people "See? Here, here, and here, my indicator fired a signal right before Bitcoin went up", and people actually get excited by it and want to purchase... And guess what? It works extremely well with crypto enthusiasts that invested in imaginary magic internet beans. Who would have thought they were gullible and dreamt of easy money fall out of the sky? The coders use the right combination of indicators, for example EMAs and candlesticks, to generate great signals IN THE PAST. I made such an indicator myself just to show it's bollocks. I think some people still used it seriously. Black box "predict the future" nonsense ==> Obvious scam. So watch out for those. If you are interested in something, make sure you understand WHAT IT DOES. Example: If the indicator provides you with order book info and idk things like this that you don't have with your broker and charting service, it obviously has value...
Education
by MrRenev
1