Trading Robot the False Good Idea?
The goal of any investor who embarks on trading is to generate profits as quickly as possible and with the least effort possible. How then not to be lurred into the idea of using a trading robot, a magic program designed to trade for you? If such a tool may seem too good to be true, many trading robots nevertheless show interesting results. Let’s see 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 algorithms or that you have programmed yourself.
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.
It must bear in mind that a trading robot only applies a pre-programmed strategy. The first limit to automatic trading lies in the this: if the strategy that applies your robot is bad, then your robot will not make any gains.
However, let’s assume that your robot applies a good strategy. If the market trend follows your predictions, then your trading robot can be a winner. But remember that stock markets are unpredictable. And how will a robot behave in an unforeseen situation? Where a human trader will be able to be smart enough to react quickly to an unexpected event – get out of the market sooner than expected or open up a new position to take advantage of a new opportunity – the robot can not make such decisions; he will only be able to apply the actions for which he has been programmed.
How to Choose a trading robot?
How, then, choose his trading robot, and ensure both that it applies the best possible trading strategy and that it is the most reactive possible market turns?
Know first that we can find different kinds of trading robots: free robots, pay, robots offered by brokers, or robots sold by developers.
It is safe to assume that a trading robot proposed by a serious broker and regulated by a European regulatory authority such as the AMF will be one of the most interesting on the market. Several reasons for this: if only to not tarnish his reputation, even lose his approval.
One of the most used trading robots is the MetaTrader Expert Advisors, present on the MetaTrader 4 and MetaTrader 5 trading 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.