Introduction
Forex robots are trading programs that make trading decisions automatically. The most famous robots among retail traders are built on the MetaTrader platform. These robots operate on MetaTrader as “Expert Advisors” and can do almost anything from providing you with a signal to place a trade, to automatically placing and managing the trade on your behalf.
Pros and Cons
If you have a Forex strategy that strictly relies on automation and does not require human intervention in the decision-making process, you can program your robot to trade 24 hours a day.
Many companies create and sell Forex robots, but be careful when dealing with them if you plan to buy one. It is not uncommon for a company to suddenly appear and start selling a Forex robot “instant wealth,” including money-back guarantees, only to disappear in about 45 days.
The majority of Forex robots that are produced for sale are not profitable, so do the necessary research before buying. It’s best to be cautious, as there is a lot of curve fitting or bias in the use of data in offers designed for purchase.
Data Bias
Data bias is the hidden enemy for many traders who buy Forex robots. It refers to the process of “cherry-picking” the best backtest from among hundreds or more, presenting that backtest as a potential result for the buyer of the Forex robot.
David Aronson is considered one of the leaders in the fight to educate investors about data bias. Aronson wrote an excellent and detailed book entitled “Evidence-Based Technical Analysis.” Among many other good arguments, he asserts that systems or indicators claimed to be the best performers or most accurate in predicting future performance are false conclusions. Often, the discovery of outlying value is proven by looking at a single dataset and not testing that indicator across multiple cycles or environments.
Successful Robots
There are some successful robots, but be aware of the data bias that plagues most systems designed for purchase. These systems usually maintain profits and manage risks successfully. They tend to be a little less about high win ratios and more about position sizing and cutting losses quickly.
If there is a good example of “buyer beware,” this is it. The phrase applies significantly to Forex robots. When considering purchasing a system, ask yourself, “If it works so well, why is it being sold at such a steep discount?” Humanity is usually not the intent. Often, non-premium systems are sold as soon as a data conclusion can be pieced together so that an uneducated buyer can purchase the code.
Frequently Asked Questions (FAQs)
How much does a Forex robot cost?
The cost of Forex trading robots varies significantly, but remember that cheap services may be cheap for a reason. If the service costs less than $100 or so, you should take extra precautions to research the service and ensure it is indeed a better deal than the more expensive services.
How do you create a Forex trading robot?
To create a Forex trading robot, you will need a broker that provides you access to the trading software’s Application Programming Interface (API). Not all Forex brokers offer access. Once you can access the API and program your trading robot, you will need to lay out a strategy. This means identifying and testing winning trading signals to ensure stability. After that, you just need to piece everything together and instruct the trading API on what to do when those signals are activated.
Does
Was this page helpful?
Thank you for your feedback! Please let us know why!
References:
– Forex Robot Factory. “Create Expert Advisors for Metatrader 4 or 5 With Online Backtesting and Zero MQL4 Coding.”
– International Journal of Economics & Management Sciences. “Management Strategy for Mechanical Trade Systems: Brief Review,” Page 6.
– David Aronson. “Evidence-Based Technical Analysis.” Wiley, 2011.
– Evidence Based Technical Analysis. “What Is Evidence Based Technical Analysis.”
– Commodity Futures Trading Commission. “Four Things That Can Help Reduce Your Risk of Forex Fraud.”
Source: https://www.thebalancemoney.com/what-is-a-forex-robot-1344957
}
.lwrp .lwrp-list-item .lwrp-list-link .lwrp-list-link-title-text,
.lwrp .lwrp-list-item .lwrp-list-no-posts-message{
}@media screen and (max-width: 480px) {
.lwrp.link-whisper-related-posts{
}
.lwrp .lwrp-title{
}.lwrp .lwrp-description{
}
.lwrp .lwrp-list-multi-container{
flex-direction: column;
}
.lwrp .lwrp-list-multi-container ul.lwrp-list{
margin-top: 0px;
margin-bottom: 0px;
padding-top: 0px;
padding-bottom: 0px;
}
.lwrp .lwrp-list-double,
.lwrp .lwrp-list-triple{
width: 100%;
}
.lwrp .lwrp-list-row-container{
justify-content: initial;
flex-direction: column;
}
.lwrp .lwrp-list-row-container .lwrp-list-item{
“`html
Leave a Reply