A trading robot is a program designed to automatically monitor the market and place buy and sell orders itself when predefined conditions are found. Therefore, it works by following a predefined algorithm.
Many people are lured into the markets by promises of easy money via trading robots or expert advisors (EA). An EA, or trading robot, is an automated trading program that runs on your computer and trades for you on your account. Selling robots and EA's online has become a huge business, but before you jump in, there are some things to consider. There are certainly benefits to automating a strategy, but there are also some drawbacks. The thing to keep in mind is that it is rarely easy to make a lot of money. The promise of easy money is the oldest business scam in the book. There is money to be made with trading robots and learning to automate strategies. Unfortunately, this might actually take longer than just learning to trade manually, because a person must first learn to trade, then learn to automate strategies via a programming language. And there are many pitfalls to buying a program, which we will discuss shortly. Below, we look at all of this and more, exploring the pros and cons of robotic trading and EA.
What is automated software or EA?
Automated trading software goes by many names, such as Expert Advisors (EA), robotic trading, program trading, automated trading or black box trading. Automated software is a program that runs on a computer and trades for the person running the program. Since it is a program, it will only take trades with parameters that match what is written in the program. Creating a trading program requires extensive knowledge of trading, as well as programming skills.
EA's are based on a trading strategy, so the strategy must be simple enough to be broken down into a series of rules that can be programmed. The more complex a strategy is, the more difficult it will be to program it effectively. For people who buy trading software, they are entirely dependent on the trading and programming skills of the person who wrote the program.
This is a vulnerable position. Like most software, it will require updating from time to time. Market conditions change and the trading software must be updated with them. If the software is not updated by someone who knows what they are doing, the software will most likely have a very short profitability lifespan (if it was profitable to begin with). EA's that are written and maintained by experienced traders and programmers have the best chance of maintaining long-term profitability.
Using automated trading software
Automated trading can be a beneficial and profitable skill, but generally, this skill cannot be purchased for a few dollars on the Internet. Automated trading requires a lot of work and skill. To effectively create and maintain a Robot trading, a trader needs both trading and programming knowledge. Robot trading is also time consuming. It is not something to set and forget. It needs to be checked regularly and manual intervention may be required when random events occur or market conditions change. Learning to automate strategies, however, is a worthwhile effort. Automating a strategy requires in-depth knowledge of the strategy and makes testing the strategy very easy. If a simple strategy can be programmed, seeing how that program has performed recently can provide information on how it will perform in the future. EA's can monitor more markets for business opportunities than humans and can react more quickly when business signals occur.
Post a Comment