KUALA LUMPUR, MALAYSIA – Media OutReach Newswire – March 22, 2024 – Trading robots are automatic trading systems that, based on a certain algorithm, independently manage the trader’s financial flows. An automated trading program or script is not subject to ordinary human weaknesses: it does not need to eat, sleep or spend time with loved ones. The trading robot can analyze the situation around the clock during all hours of market operation, choose the most opportune times for transactions, control the account balance and monitor the execution of orders. Practice shows that the use of Forex trading robots significantly simplifies and automates the trader’s activity.
History and types of creation of trading robots
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First generation. Prototypes of modern commercial robots appeared in the late 60s and early 70s of the last century. These semi-automatic systems were based on strategies for following long-term trends, with sudden changes in quotes serving as a signal. They reported to traders about changes in the market, and traders made their own decisions about what to do in that situation.
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The second generation. In the early 1970s, new robots based on statistical algorithms appeared. The first was “momentum,” which monitored the oversold market using various indicators. Another system was “reversal systems”, which detected deviations of the traded asset from its average value over a specified period and calculated times when the probability of quotes reverting to the average would be greater than 50 %.
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The third generation robots relied not so much on numerical price and time data as on a data set: they identified patterns in the market and reported when the pattern changed, not the trend.
Algorithms have improved alongside the technological progress of society. Thus, with the growth in Internet connection speed, high frequency robots (HFT robots) have appeared, capable of carrying out thousands of transactions per second. With the advent of artificial intelligence (AI) technology, there is no longer a need to write extensive code: AI has taken over. Machine learning (ML) technology will help create a trading algorithm by observing the trader’s actions.
How to choose a trading robot
The actual effectiveness of a trading robot directly depends on the algorithm by which it is guided. A certain algorithm often generates solid profits for a long period of time, and then, due to certain market mechanisms, it begins to operate at a loss. Therefore, to make money on Forex, you must not only be able to install and run the program, but also understand the relevance of its working methods. During the selection process, it is necessary to study the essential information and parameters that directly affect the profitability of automated trading.
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Transaction frequency. Suppose your broker receives commissions for opening and closing positions. In this case, the number of operations performed by the robot is important because the more orders you open, the more commissions you will have to pay. For example, the Octa broker does not charge any commission for entering or exiting a position. The trading robot can open as many orders as trading signals it receives without commission problems, because Octa only takes the spread into account.
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Risk-reward ratio. A Forex robot should be profitable, but what exactly do you mean by this concept? How much is the profit for you? After all, it’s one thing if you’re happy with an income of $50-70 a week and another if you want to earn $100 a day. The higher the expectations, the higher the degree of risk. Some robots are designed to trade with conservative strategies, which are the least risky but do not promise significant income. Other robots are suitable for aggressive trading, where large drawdowns are allowed in the expectation of large profits.
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Commercial conditions. No universal trading robot would trade with absolutely the same efficiency, regardless of market conditions. Some robots are designed for trend trading, and some show good results only when trading during flat periods. Typically, the description of each Forex robot tells you what type it belongs to. If you don’t know which is better: trend trading or channel breakout, pay attention to which currency pairs you want to trade. Some pairs tend to form clear, relatively stable trends, while others are more likely to move in sideways channels.
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Sustainability. All automated Forex trading systems should be tested. To understand the stability of the Expert Advisor’s operation, it is not necessary to immediately use it on a real trading account: you can choose a demo one to test it. For example, Octa’s trading conditions on real and demo accounts are identical, which allows testing the robot in situations as close as possible to the real market.
Why do you need trading robots in the first place? To make money, of course. The robots do not get tired and can trade 24 hours a day, seven days a week. Trading robots today can be purchased or downloaded for free. The main thing is to adequately evaluate your purchase. For beginners, a trading robot can become a teacher of foreign exchange operations, and for a professional – working hands that implement the necessary trading strategy.
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The issuer is solely responsible for the content of this announcement.
