Trading robots: why and how to use them

07.09.2020

Feature articles

Trading robots are special pieces of software designed to use with the trading terminals MetaTrader 4 and 5. Robots can open and close trades and are based on algorithms that use original Forex strategies. 

There are thousands of robots (expert advisors, EAs) used for trading in Forex, usually they are created using special software. Depending on the strategy used, they can be divided into: 

  • trend and counter-trend robots; 

  • scalpers and pipsers; 

  • netting robots; 

  • hedge robots; 

  • multicurrency robots;  

  • binary options robots; 

  • and others 

Higher profits mean higher risks 

The return rate of Forex EAs depends not only on the accuracy of trading signals provided by the strategy, but also on how aggressive the robot is. The higher the potential profit, the higher the potential risks are, and they can lead to severe losses—even up to the complete loss of deposit. 

Trading robots designed to follow trends usually offer a lower return rate and lower risks. Potential profit promised by robots that use the martingale strategy is significantly higher, which also entails higher risks. As a rule, most EAs allow traders to configure the permitted level of risk. 20% per month is usually considered to be an acceptable return rate for a Forex robot. 

How Forex robots work 

Forex robots use technical indicators that come with the underlying strategy to analyze the market situation. When all conditions for opening a trade are met according to the strategy, robots place a Buy or a Sell order. The position’s size is determined by traders themselves based on the recommended range before the robot’s installation and depends on the amount of deposit and the size of leverage. 

The trade is closed automatically when all respective conditions according to the strategy are met. 

MetaEditor and MQL: do it yourself 

Programming language skills are necessary to create a trading robot—MetaQuotes Language 4 (MQL4) or MQL5. They were designed and included in the terminals MetaTrader 4 and MetaTrader 5 specifically to facilitate the creation of trading robots and technical indicators. 

Moreover, the creation of Forex robots requires theoretical and practical skills in trading and money management, as well as understanding the inner workings of the currency market. 

MetaTrader platform features MetaEditor—a dedicated coding environment that possesses the full range of tools for the creation of Forex robots: 

  • templates;  

  • snippets;  

  • debugging; 

  • profiling; 

  • autocompletion; 

  • built-in version repository. 

 

How to buy a trading robot? 

Forex trading EA can be purchased in special stores, as well as on websites that focus on the financial markets. Moreover, Forex brokers often offer trading robots that are optimized for their terminals 

Among the largest platforms that offer Forex robots for trading in MT4 and MT5 is MetaTrader Market. This is a store for trading apps directly supported by the creators of the programming language MQL. 

 

The built-in filter system allows traders to find a robot to suit their requirements and desires. 

The price of a trading robot may vary between dozens and hundreds of dollars. The number depends not only on the EA’s efficiency, but also on the subjective decision of the creator. A robot with a profit rate of 50% can easily cost either $25 or $250. 

Choosing a robot: three criteria  

It’s recommended to look for an EA only in the trusted trading marketplaces that offer tech support for robots. 

There are three major factors that can help choose the right Forex robot: 

  • Permitted level of risk and potential profit. This factor is based on the principles of capital management determined by the trader. For example, if deep drawdowns are out of the question, traders should look for robots based on conservative strategies with minimum risk and low potential profit. 

  • Type of the trading robot. The choice of the Forex robot usually depends on your preferences and style of trading. For instance, scalping robots won’t suit for currency pairs that show consistent trends. 

  • Ability to test the robot. Before setting up the robot in a real account, traders adjust the parameters and apply the final settings in the strategy test. It’s also very important to test the robot in real trading, and not just based on the historical performance. Demo or cent accounts are usually used for that. 

 

A free demo version of the EA would be a huge advantage. This allows seeing robots in practice, and choosing the right option after running some test. 

Many providers also post their EAs on the analytical service Myfxbook, where the trading stats of robots can be monitored in real time. 

Trading robots: user reviews 

Users visit autotrading forums to post and read feedback on Forex robots. Negative experience with EAs is usually rooted in one of these reasons: 

  • the robot isn’t set up properly; 

  • the robot is poorly designed and has flawed code; 

  • trading conditions provided by the broker aren’t compatible with the EA. 

The third factor is particularly important, since the broader the trading conditions provided by the broker are, the more trading robots can be used, which potentially means higher profits. 

Grand Capital provides the most favorable conditions for robot trading on ECN Prime accounts. To use an EA for trading, it’s necessary to install it in your copy of the MetaTrader 4 terminal. 

Open an ECN Prime account 

  • Installing robots in MetaTrader 4 and MetaTrader 5 prevents requotes and slippage during trading. Grand Capital allows testing robots you created or purchased using a demo or a Micro account with deposits starting at $10. 

Open a demo account Micro account 

Alternatives to trading robots 

Moreover, the broker offers alternative uses of EAs for investors and traders—for example, the copy trading service RAMM

 

Many traders don’t have sufficient experience to set up a trading robot properly. Such traders and investors effectively make profits in the financial markets by copying transactions placed by professionals. 

The system of RAMM accounts allows experienced traders to use EAs for superior results. Investors select the suitable trading strategy and copy all trades to their accounts automatically. 

The RAMM investment service allows bringing trading risk to a minimum. Regardless of the risk level of the Forex robot used, investors can set the copying ratio, the permitted level of drawdown, and close the trade at any time. 

Unlike EAs that require setting the size of a position in order to make a successful transaction, RAMM accounts set the lot size automatically depending on the ratio of investor’s and trader’s funds. 

Open a RAMM account Choose a strategy 

Another alternative to trading robots at Grand Capital are investment portfolios

 

Investment portfolios are formed by professional financial market traders. They can be adjusted to suit any investment amount, level of potential profit, and risk. 

Components of investment portfolios:  

  • stocks; 

  • precious metals; 

  • commodity futures;  

  • currency pairs. 

Download a ready-made portfolio 

Grand Capital analysts also offer custom portfolios to suit your preferences. They use highly accurate return forecasts for each asset, thus guaranteeing the perfect balance of risks. Over 330 CFD instruments are available to investors, Grand Capital offers some of the most favorable margin requirements in the market. 

Request a custom portfolio 

Author: admin
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