Forex robots are automated trading systems that can analyse the forex market using built-in trading algorithms to find trading signals. When the forex robot identifies a buy or sell signal according to the forex trading strategy implemented withing the code, it can place and manage a position on behalf of the user. This makes automated forex trading strategies a hands-free solution for anyone who may not have the time or skills required to trade forex manually. Whilst this might sound like an attractive proposition at first, there are some important pros and cons to be aware of before using any forex trading robot which I will cover in this article.
How do forex robots work?
Forex robots work by automatically scanning the currency pair charts in your trading platform for trading signals. They can scan the forex market 24 hours day and do all of the trading activity for you. You simply load them on the relevant currency pairs and they will do all of the work. Just keep in mind that a forex bot cannot see things that the human eye can and some may not be aware of fundamental analysis such as economic news releases that can have a significant impact on the price.
Most automated trading systems will include customisable settings that you can adjust according to your trading preferences, including lot size or risk percentage, stop loss, take profit, trading hours, trading days and more. The more advanced automated strategies might even include the indicators and other entry/exit criteria in the external inputs for the user to experiment with.
If you buy a forex robot, the developer will probably provide you with default set files that have already been optimised for specific currency pairs. Good forex robot developers should have already optimised the forex robot across various currency pairs and timeframes in order to finds the best robot settings based on historical data. You can of course optimise forex robots to find the best combination of settings for all of your favourite currency pairs and timeframes if you wish.
Is it good to use a forex trading robot?
Yes, it can be a good solution to use a forex robot is you have limited time to learn how to trade but still want to get involved in the forex market. Along with forex trading signals and social trading platforms, forex robots are popular for traders of all experience levels. It is just a matter of sifting through the thousands of poorly coded forex robots to find the best forex robots.
However, I do not think anything can beat learning how to trade forex manually. This way you can learn from your mistakes and do not need to rely on any forex software. I think this can help people to become better forex traders in the long run. There can also be no guarantee on just how good or bad any auto forex trading system will perform.
Are forex trading robots safe to use?
Yes, forex bots are safe to use but only if you know what you are doing. If you download a forex robot that does not use a stop loss and then over leverage your forex account with high position sizes, do not be surprised if you get a margin call and blow your account.
Some forex trading robots are riskier than others, so make sure you completely understand how the robot works and what to expect. I would always start using a forex robot on a demo account to begin with. This allows me to get a feel for how it trades to see if it meets my requirements before making a commitment.
How much is a forex trading robot?
Forex robots vary greatly in terms if price. You can get free forex robots, or you can pay thousands. Some forex bots include free trials which will allow you to test them out to see if they live up to expectations before making a purchase. However, if you test an automated forex system for 1 month and it performs poorly, that does not necessarily mean that it is a bad robot. It could just be that it had a bad month like any trading strategy can. We cannot win all of the time so manage your expectations accordingly.
The MetaTrader marketplace has plenty of free and paid forex robots that you can try out. They can be accessed directly from within the MetaTrader platforms which you can get from the majority of forex brokers including IC Markets. They have some of the best trading conditions for manual and automated forex trading strategies. This includes tight spreads, low fees and quick execution speeds at some of the best available prices on the forex market at all times.
Are forex bots profitable?
The profit or loss of a forex robot really depends on so many factors. The current market scenario, broker conditions and user inputs can all have a huge impact on results. I have seen the exact same forex robot give a completely different set of results due to a difference in the current market and broker conditions.
For instance, lets take a forex scalping robot as an example. If the robot is targeting 5 pips per trade and a broker has a spread of 1 pip and charges 1 pip commission, the price would need to move 7 pips without slippage for the 5-pip target to be reached. Now, if the forex broker can a spread of 3 pips and charged 2 pips commission, the price would instead need to move 10 pips in favour of the robot to reach the target. This could be the difference between a forex robot winning or losing.
Then we have to consider what the forex market current conditions are. If you are using a forex robot that looks for long trades (buy) and we are in a bull market, chances are it will do much better than if we are in a bearish market. There are forex robots that can adjust to different market conditions, including the Forex Flex EA.
I think we also need to take into consideration when we start using any automated forex strategy as I see too many users can be quick to write them off. If the first month is a bad month, this does not mean the forex robot is automatically a scam. It could have just been a one off and the next few months could be much better.
However, we cannot predict what will happen in the future which is why it is imperative to never risk more than we can afford to lose no matter how good any forex robot claims to be. If my years in forex trading have taught me anything, it is that nothing is certain and anything can happen.
Advantages of forex robots
- Automated forex trading strategies
- Hands-off solution for traders
- Require minimal trading skills and knowledge
- Anyone can use them regardless of experience level
- Lots of free and paid forex robots available
- Customisable settings for different trading styles
- Some have verifiable results to check performance
Disadvantages of forex robots
- Lots of forex robot scams to avoid
- Some use dangerous money management strategies
- Some robots are restricted to certain forex platforms
- Require ideal broker and market conditions
- Cannot account for unexpected black swan events
Conclusion: do forex trading robots actually work?
Yes, forex robots do work but you should do your own due diligence and make sure that you only ever consider using an automated forex strategy that fits within your trading style.
Some forex traders do not mind taking extra risk for potential rewards, so they may be fine with using a dangerous martingale forex robot or automated grid trading strategy. Others may be more conservative and will want to look for a forex robot with years of verified results such as the Forex Robotron EA.
Regardless, historical results are not a reflection of what will happen moving forward. Even the best forex robots will have good and bad periods. There are also outside influences that can impact the performance of a forex bot such as broker conditions and the economic climate.
Just because a forex robot works now, it does not mean that it will be around forever and continue to perform. However, there are plenty of good forex robots out there which can automatically scan and trade the markets on behalf of the user whilst they go about their daily business.
I personally think that nothing beats learning how to trade forex by yourself. That way, you have nobody else to blame and can trade how and when you like. Although I do understand why people use forex robots especially if they do not have the time or skills to trade manually at the moment.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.