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Automated Trading systems refer to a collection of software applications which allow traders to automate their trading decisions. Traders can establish specific rules for trading entries and exits, with the system executing the commands as soon as those rules are met. Currently, it is estimated that automatic trading systems constitute about 75% of the shares on U.S. stock exchanges according to various sources.
The rules governing the entry and exiting of trades are generally based on some simple conditions such as average crossovers and other factors. They usually require a direct access broker to work properly. Forex Robots and Expert Advisors are included in this category and are offered by some of the best forex brokers in the market. However, due to the overwhelming number of automated trading systems in availability, selecting the right and legitimate option can be a daunting task. Luckily there are many authoritative sites that present users with the best options for automated trading systems.
In spite of dubious returns generated by using forex expert advisors, their popularity keeps increasing. Forex expert advisors are a type of automatic trading software, that uses trading signals to perform buy/sell operations on the behalf of a human client. It uses a system of pre-built trading rules to make decisions.
However, the present marketing landscape is filled with scams and frauds, disguising themselves as working forex robots to entice unsuspecting traders. There have been many cases of traders losing all they have because of using poorly programmed forex robots. Thus, for those of you who don't know the details of how the best trading forex robots work, this article aims to present five facts about them.
- One of the foremost features of expert advisors and forex robots is that it disables the emotional aspect of trading. It executes the trade based on signals provided by various sources. This tool thus helps prevent panic decisions while making trades. In certain circumstances, traders may be emotionally driven to pull out of a trade and miss out trading opportunities in the process. EAs make sure that the trader does not deviate from the original trading plan.
- As efficient as trading robots really are, their intelligence remains artificial in nature. There have thus been cases where the forex robots are unable to adapt to adverse market conditions triggered by mainstream economic news. In certain conditions, since the EA or robot is based on logic, it may produce erratic trading decisions if markets are not normal.
- Leading analysts and expert programmers are behind most of the reliable forex robots in the market. They are responsible for coding different strategies into an automated system, which opens, manages and closes all the positions in the market without the need for any human intervention. Although considered legal in many countries, some countries and brokers outlaw the use of forex robots in forex trading. It may happen that forex robots are subject to numerous restrictions designed to protect normal traders from market manipulation, or high frequency trading.
- Back-testing is another advantage of working with an automated trading system. It refers to a test where the trading rules applied by a trader can be used to test against historical market data to determine its viability. Because the rules followed by robot cannot be changed frequently and need to be as accurate and absolute as possible, it should be implemented after performing a back-test. Back-testing can also help traders to evaluate and modify their existing trading idea if they do not get favorable results from the test
- Delays in trade execution while trading manually, can make a huge difference in a trade’s outcome, with the trader ending up with a loss. Since automated trading systems are governed by software applications and the responses are instantaneous, traders are able to enter and exit markets as they please without a delay, minimizing the chances of missed trading opportunities.
Conclusion
The increase in popularity of Forex robots and expert advisors is justified for the kind of profits they generate. Although boasting several benefits, automated trading systems should never be considered foolproof. Because of the different types of Expert Advisors available in the market, traders should conduct their own independent research, before making any final decision.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.