The goal of any investor who starts trading is to generate profits quickly and with minimal effort. It’s easy to be lured by the idea of using a trading robot—a program designed to trade for you. Such a tool may seem too good to be true. However, many trading robots show interesting results. This is especially true when considering the automated trading strategy benefits they offer. Let’s explore what a trading robot is.

What is a trading robot?

To put it simply, a trading robot, also called Expert Advisor (EA) in English, is an automatic trading software capable of placing orders on the stock markets.

The trading robot opens and closes your positions automatically; the strategy it applies is based on a pre-programmed algorithm or one that you have programmed yourself. This hands-free approach highlights some key automated trading strategy benefits, such as consistency in execution and reduced emotional interference.

Why trade with a robot?

The reasons for using a trader robot are pretty obvious. Since it trades for you, the trading robot allows you to save time first. Everyone, indeed, can not practice trading full time. If trading is not your main business and you can not spend more than an hour a day, then automatic trading can be a good solution for you.

Like any robot, the trader robot is also empty of any form of emotion; it applies the strategy given, without moods and especially without stress. Because trading, do not forget, is an activity that generates stress. It is certainly about making money, but with the possibility of losing money, and this idea can get investors pretty stressed. If you have trouble controlling your emotions, then the trading robot can be a solution for you.

Finally, if you are both a trader and developer, automatic trading allows you to program your own robot. You define the trading strategy you want to apply yourself and develop an Expert Advisor that will apply it automatically.

The limits of the trading robot

Of course, a trading robot who wins every time, is too good to be true and if such a robot existed, then there would never be any traders on this planet.

Keep in mind that a trading robot only follows a pre-programmed strategy. The main limit of automatic trading is this: if your robot’s strategy is bad, it won’t make profits.

Now, let’s assume your robot uses a good strategy. If the market trend matches your predictions, your robot can win. But remember, stock markets are unpredictable.

How will a robot act in an unexpected situation? A human trader can quickly react, exiting the market early or opening new positions to seize opportunities. A robot cannot make such decisions. It only performs actions it was programmed to do.

How to Choose a trading robot?

How do you choose a trading robot that applies the best strategy and reacts well to market changes?

First, know there are different kinds of trading robots: free robots, paid ones, robots offered by brokers, and those sold by developers.

A trading robot provided by a serious broker and regulated by a European authority like the AMF is usually one of the best options. This is because brokers want to protect their reputation and maintain approval.

One of the most popular trading robots is the MetaTrader Expert Advisor, available on the MetaTrader 4 and MetaTrader 5 platforms.

In any case, it is always better to test your trading robot on a demo account, that is to say under the real conditions of the market but with a fictitious capital. This allows you to evaluate the strategy followed by the robot, but also to see how the robot reacts in different situations.