Trading with Forex Robots

Forex robots are software programs that submit online trading orders. They've grown in sophistication with time, and the best can be programmed to automatically execute more than one trading strategies. As real-time programs, robots can instantly react to a large volume of price data, well beyond the abilities of human traders. If carefully prepared and monitored, forex robots give traders numerous advantages.

Trading Signals

A trading robot is linked to an online trading account and receives constant price updates. The robot can be programmed to recognize dozens of technical trading signals and execute real-time orders according to those signals. A technical trading signal is a purchase or sell recommendation arising from the pattern of previous forex prices, a sort of technical analysis. Price trends and momentum indicators are just two of the several types of analysis robots can offer. Robots are usually mathematically precise and never have to take a break, two attributes that can't be ascribed to human traders.

Strategy Testing

Robots can operate in test mode, in which all the trades are hypothetical. This capability is enormously helpful in backtesting trading strategies. Backtesting involves utilizing previous trade data to generate hypothetical buy and sell recommendations, and then comparing the resulting gains and losses with what actually occurred in the market. Via a series of refinements, an investor can attempt to fit the data to real market outcomes in the hope that the resulting strategy accurately predicts future price movements.

Discipline

Forex trading can be emotionally stressful. Traders are typically torn between fear and greed. When a trader's emotions become too strong, they can subvert the discipline needed to stick to a trading strategy. Often, panic selling is usually an opportunity to buy a currency inexpensively, however it takes intestinal fortitude to stand up against the crowd and buy something that everyone else is selling. Robots have no such problems, and if an investor has gained confidence in the robot's abilities, he might benefit throughout an emotional trading period by letting the robot to buck the crowd.

Stealth

One type of forex broker, a market maker, trades against its clients. As a client, an investor is better off not broadcasting his intentions to purchase or sell a position at a certain price through limit and stop-loss orders. These types of orders establish prices which will trigger a trade. Armed with an understanding of these trigger points, a dishonest market maker may manipulate prices to a trader's detriment. Robots have no need to pre-establish trigger points with limit and stop orders as they monitor the market in real time and can issue buy and sell orders at trigger points without first warning the broker.