Advantages and Disadvantages of Automated Trading Robots
If you were an avid trader and you knew there is a way to keep your trading working even when you can’t be there, and be promised maximum returns without having to pay a fee wouldn’t you take it?
That option is and has been available since the late 90s at the dawn of online trading. Automated trading robots are programs which algorithmically make trading decisions based on preset aspects of orders like time, price, quality etc. There are different types of trading robots, but they are all based on the same theory, and perform the same functions.
A trader carefully puts their trading essence into the program as they customizes its strategy and the aspects based on which it will react, turning it into a representation of their own mind and trading style. The only difference is that the trader will not be monitoring the system around the clock, and therefore is stripped of the ability to intervene in the occurrence that conditions do not comply with the usual strategy the trader follows.
The best advantage of trading robots is the emotionless method of performing trades. Emotions such as anger, stress, fear and greed are a trader’s worst enemy, and even the best trader cannot be completely untouched by all the factors which induce these emotions. A trading system will simply follow the strategy and act accurately and responsibly without any last minutes changes, which is why it can turn out to be profitable and helpful. That exact same reason; lack of last minuet changes, is why you may wake up with a hollow account.
As ‘smart’ as these systems can be created, they will never have the human factor, of reacting to unpredicted situations, which they have not been preprogrammed to react to.
Technical issues of course are another big factor behind the many failure stories shared by traders. A lag of information update, receiving the wrong data or something as trivial as an electricity cut while your positions are opened can lead to great losses.
Admittedly these programs are used by big investment companies, and by asset management programs. Though still prone to error, they are backed up and monitored in ways which are very hard to achieve at home.
Home versions of trading robots are very susceptible to fraud and Forex scam and cannot always be trusted. They can also prove to be much more expensive than you’d imagine. The cost of the program itself can be affordable but the security systems which need to be installed with it; in addition to the data back-up systems which are require can all together be costly.
At the end of the day trading in Forex is a risk all in its self, you can test the programs through demo accounts and see for yourself, although it’s good to note that even the best Trading Systems have had complains and while companies may take responsibility it is not always the case that you will be reimbursed.
Automated trading robots have their advantages and disadvantages. What you will focus on is your choice.