4 Tips To Get The Most Out Of Your Forex Robot

Estimated reading time: 4 minutes

In recent decades, automated trading has been widely used in Forex and Money Markets, as well as in financial markets. This auto trading provided substantial benefits to transaction efficiency. Many trading robots have been created to substitute humans, capable of simulating trading strategies and continuously making profits.

If you have been trading in the forex market for quite some time, you will be aware of “Forex Robots”. They are referred to as computer programs that help determine whether to buy or sell a currency pair at any one time. They open these trading positions automatically based on a set of forex trading signals. These programs are designed to remove the psychological element of trading, which can be detrimental. With the ability to trade 24 hours a day and unemotional, logical, ever-vigilant for profitable trades, it has become popular among novice and experienced traders. 

However, for newcomers, the applications can be quite confusing, especially when choosing them. This article deals with certain tips that will help you find the best forex robot for your trading style. 

Why do Forex Robots fail?

There are a few reasons why forex robots fail. These are highlighted in brief below. 

• Different brokers (in many cases even different account types) have different price data. This makes the same trading strategy generate different entry/exit signals on different accounts.
• A trade might be missed for many reasons which might break the consistency of the trading sequence.
• There can be slippage on each trade during the entry and then again during the exit. That’s another additional cost that affects the end result
• Spread changes all the time, especially during high-impact economic news releases. 
• Poorly programmed EAs cannot tackle changing market conditions which can also result in the trader’s loss of trading capital. 

4 tips to get the best out of your forex robot

1. Selecting a robot

You will need to conduct research to find a forex robot that can make you some real pips. Make sure that the customer service responds to your emails and support requests regarding the product. Check whether the robot uses a proven or stable trading strategy made from sound trading theory and logic. Finally, make sure that the robot comes from a reputed developer who has extensive experience in the forex market. 

2. Choosing the lot size

One of the biggest mistakes new traders make is to overtrade his or her account. They make mistakes such as not getting the required funding to have at least three forex trades open with enough room for drawdown. This results in a margin call which can be disastrous for a trading account. To avoid this, always start with moderate investments and move your way up. Forex robots that have negative balance protection help traders in this regard. 

3. Check historical records

An EA must be able to provide accurate historical records on backtests.  This provides an assurance that the trading strategy is indeed working and will provide the highest chances of making gains. Traders should always check out metrics such as drawdown rate and yield to check whether the strategy is worth their investment. Forex robots with high drawdowns are an indication of a risky or dangerous trading strategy being used by the EA. 

4. Using the robot correctly

Finally, make sure that the forex robot is set up with your broker correctly. Most reliable EAs provide a user set-up manual and a customer care number if the user runs into problems. EAs which provide recommended brokers are usually easy to set up. You should also give it some time to actually start producing gains. 

Conclusion

Robotic trading can be both positive and negative for traders. There are some risks associated with this type of trading but there are, also, many benefits that can make this activity, lucrative and attractive. Forex trading is a flexible, accessible and potentially profitable activity. However, this type of trading faces some major challenges which are volatility, lighter regulatory protection, and fewer residual returns. Thus it is always very important to source your forex robot from a reliable source. You can do this by researching on various forums and authoritative sites which provide detailed results and testimonials from fellow traders. 

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