Lately, I have received so many questions about trading robots especially because I have been making posts about the Pips Pilot bot that I use in generating passive income for myself. A lot of traders have reached out to me to ask questions about trading robots generally.
In this article, I am going to share some frequently asked questions about forex robots that will beneficial to you.
What is a forex trading robot?
A forex robot is a software code that is created according to a particular trading strategy to help traders execute buy or sell positions based on pre determined rules. It is also known as Expert Advisor (EA).
Trading robots can execute trades and manage risk with little or no human intervention.
The struggle with psychology is eliminated with the use of robots.
Can I make consistent profits with the use of trading robots?
Yes you can. The success of trading robots depend on factors like, the quality of the strategy programmed into the bot. market conditions, risk management, backtesting. A good understanding of how the bot operates can also have a huge impact on your ability to make consistent profits with robots.
What do I gain from trading with Forex robots?
Source of passive income.
Trading robots help traders generate passive income without much labour.
No emotions attached.
Once a trade signal meets the set conditions, robots instantly execute trades without thinking twice. Fear, greed, anxiety and other human emotions in trading are not operational. This gives the trader the chance to stay away from making emotion based decisions.
Trading robots come with risk management measures that allows the traders set parameters for their lot size, TP and SL use. With this, you can maintain discipline for growth and sustainability of the your trading account.
Unlimited market access.
You can set your trading robot to run 24/5 without putting a stop to it. With this it is able to take advantage of every opportunity thereby maximising profits for the trader.
Open to update
Traders can update the setting of their trading robots to suit their trading style. You can be incorporate indicators, chart patterns, order blocks, supply, demand and any other trading pattern into the trading robot to suit your preference as a trader.
Reduces chart time
Traders do not have to sit in front of the charts all day searching for trading opportunities. This allows traders to focus on other aspects of their lives while the bot does the trade analysis and execution.
What are the limitations of Forex robots?
Lack of adaptability; Some trading robots are programmed to work only in certain market conditions. For instance, some trading robots are set to only take trades in a bull market. If market conditions change to bearish, the bot maybe unable to make profits for the trader.
Technical malfunction; Robots rely heavily on technology. If there are technical issues with the trading platform or network challenges, it can cause poor execution of trades. This could cause losses.
Lack of knowledge
Without proper education on how the robot functions, the trader will not be able to interprete the actions on the bot. The trader interfers unnecessarily with the bot which can hinder the successful performance of the bot.
How can I tell if a Forex robot is a scam?
If 100% profit is guaranteed, it is most likely a scam. No trading style, whether manual or automated is without periods of losing streaks.
If the vendor offers it to you for a lifetime access. Good trading robots are renewed within a set period of time. For instance, you could be given a 1 year license depending on the settings of the robot.
If the vendor offers it to you for free or at a ridiculously low amount, it may not be as effective enough to generate consistent profits.
Can I use EA on demo accounts?
Yes. It is always advisable that when you purchase an EA, test it on a demo account. Use your demo account to learn how the bot operates before trading live.
How do I choose a reliable forex trading robot?
Look for transparency in the strategy and operations of the bot. Before you purchase, confirm what strategy the robot trades so that you can determine if it is suitable for you or not.
Check the history of the performance of the bot with either demo or real account. If it has generated more consistent profits over different market conditions, it is likely a reliable bot.
Look out for testimonials and reviews by other traders who have used the bot. If there are more positive reviews than negative ones, it is an indication that the bot is a good one.
Look for robots that can allow you customize the settings and add features to upgrade its performance.
Ensure the vendor you’re purchasing from is one who is reliable and has a record of providing valuable services to his clients. He should also have good support system to in place to assist you whenever you need help.