CFD and Forex contracts are now traded using different strategies and on various platforms that support Forex trading robots. And because almost everything can now be converted into a computer algorithm, the number of these trading robots is now equal to the number of ready strategies. No matter how profitable your strategy is, it can be automated by a trading robot that will handle it more efficiently than you.
Forex Trading Robots: Definition
It is a unique trading system that operates in automatic or semi-automatic mode. In the automatic mode, the trading robot proposes an autonomous order placement process with all the parameters required, like stop loss, take profit, leverage, etc., together with a thorough market analysis and signal identification for trade execution. This is one of the main reasons why trading robots are popular among novice traders, since they lack the market knowledge for both profit-making and market analysis.
I should mention that the main function of a trading robot is to take full or partial control of trade executions from the human trader, and the absence of emotional influence is one of the core advantages of the Forex Robot trader.
It is in human nature to make mistakes, but an algorithm cannot and will not make a mistake. Forex trading robots follow a specific guideline in the automated algorithm; this is the reason it cannot make a mistake, and it is capable of executing trades in milliseconds, 24/7, non-stop. This is unlike the human trader who can succumb to excitement, which will ultimately land him on losses.
How to set up Forex trading Robots in MetaTrader4
You are going to need a trading platform that supports MQL4 or MQL5, like the MetaTrader. Now, you need to buy a trading robot from the numerous Forex trading robots online or create one if you can. After downloading it, you might find files with the .ex4 or .mql extension inside the archive folder. Note that it is possible to trade with either of these files. Others, like libraries and indicators, might also be included in the archive folder.
The trading robot should be placed in the “Experts” folder found under “MQL4” in the terminal’s data directory, accessible via “File -> Open Data Folder.” If included, libraries go in “MQL4/Libraries,” indicator files (.ex4 or .mql) in “MQL4/Indicators,” and preset files (.set) in “MQL4/Presets.” To enable the robot, go to “Tools -> Options,” open the “Expert Advisors” tab, and check the necessary boxes. Then, in the Navigator’s “Experts” tab, select your robot—reload the terminal if it’s not visible—and drag it onto the desired trading chart.
The Setting Window
This will bring up a robot settings window. Depending on the advisor, you can adjust several settings, including the trading volume in lots that the robot will use to initiate the transaction, among many others. If the Expert Advisor has preset settings, you can apply them by selecting the file and applying it by clicking the “Load” button. Additionally, by selecting the “Save” button, you can save your configuration. A smiling face should show up on the chart once you click “Ok,” indicating that the robot is operating as it should. Right-click the chart and select “Expert Advisors -> Properties” with a left-click if the cheerful face is dejected. The “Common” tab will be of importance when the Expert Advisor settings reopen. Here, check the boxes. Additionally, you must confirm that the green “Auto-trading” button was illuminated and that the top panel of the terminal was pressed.
However, there are several fundamental parameters that we may often encounter in EAs, so let’s examine the most prevalent ones. A parameter’s values can be expressed as numerical values, such as the lot size or the maximum quantity of orders that can be opened. This parameter may be turned on or off, or it may be responsible for a certain function. And its value may just take these phases. The function is activated if you select On, True, or 1. The function is not functional if it is off, False, or 0. Here, everything relies on the developer’s choice on how to specify these settings.
Such parameters are frequently seen:
Lot or Lotsize: In this case, the size of each transaction lot is fixed.
Money Management — allows or prohibits risk auto-management.
To highlight a particular order or mark essential information, comments are typically entered in a text area.
Risk — determines the amount of risk per trade or total drawdown, typically expressed as a percentage, at which the expert advisor ceases trading.
Magic Number: The Expert Advisor uses a special number called MagicNumber to identify its orders. Several Expert Advisors will misunderstand each other’s commands and treat other EAs as their own if they have the same MagicNumber on the same account.
GMTOffset: The time offset with relation to Greenwich Mean Time is denoted by GMTOffset. Usually, this is a difference in hours.
These are fundamental parameters. However, there are also robots with more intricate and sophisticated environments. Additionally, a novice would not be able to trade if the developer had not included comprehensive instructions. Additionally, the robot will trade at a loss if it is configured improperly.
Pros and Cons of Using Forex Trading Robots
Compared to conventional trading techniques, algorithmic trading offers numerous benefits.
The primary benefits are as follows:
Quickness: Within a split second, trading algorithms assess the circumstances and execute a trade. This is significant since price movements are tracked on hundreds of assets at once and in real-time. A human would not be able to do so on a market as unpredictable as FX.
Precision: There is very little human involvement. This implies that the likelihood of errors resulting from human emotions or other causes is significantly decreased.
Profitability: Since the forex automation opens positions as soon as it detects a signal, it enables rapid trading. Hundreds of trades can be processed daily using the application. Working at such a speed is impossible for humans.
Increased market reach: One can concentrate on the main markets while working with multiple charts at once. A forex trading robot simultaneously keeps an eye on every market.
Diversification: A forex robot can be configured to open counter positions, trade linked currency pairings, and employ various risk-diversion strategies. The trading robot continues to operate as if nothing had happened, while the user’s mind is racing.
The Primary Disadvantages
Reliance on the supplier of technology: You are not making progress if you simply use forex robots to trade. As time goes on and the market shifts, bots become less useful. Reconfiguring the software or trading without it is not an issue if you know how to trade. You are doomed to spend your entire life paying money to some random developer if you are not an expert in trading, even if there is no assurance that you will be profitable. You will lose your deposit if you spend money on the trading robot.
Brokers’ limitations: Connecting forex trading robots to the platform is not permitted by all brokers. Regulators from several nations were unable to agree on whether algorithmic trading should be permitted or not. Therefore, be ready for the possibility that your preferred brokers may not possess such a chip. Furthermore, the circumstances are not as severe as we would like them to be where they occur.
The algorithms’ brief existence: It’s the shiny item that developers would rather not talk about. The reality is that nearly 98% of trading algorithms have a very short lifespan because the forex market is changing so quickly. They continue to labor until they abruptly lose interest in the market.
Simply put, you need a flawless algorithm for a perfect result. But such an algorithm can be created only for static systems. The market is dynamic, which means that no ideal trading scenario can exist a priori.
Check this out to Forex Trading Algorithms: Risks and Limitations learn more about the pros and cons of
Forex Trading Robots
Conclusion
In conclusion, Forex trading robots are by no means a surefire way to success, even though they provide strong benefits, including speed, accuracy, and the capacity to execute transactions continuously without human intervention. Although these automated methods can improve accessibility and trading efficiency, particularly for beginners, they also have many drawbacks, including reliance on technology suppliers, broker limits, and the limited lifespan of most algorithms in a market that is always changing. In the end, a balanced strategy that incorporates automatic tools and human judgment, as well as a firm grasp of trading fundamentals, is necessary for steady long-term profitability.
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