What Are Forex Robots?

What are "forex robots"?

In simple terms, forex robots are automated trading programs that will watch and trade forex currency markets for you automatically.

More precisely, they are sophisticated artificial intelligence programs based on a proprietary language specific to the Metatrader 4 trading platform that will automatically examine the market(s) that it is programmed to watch. It will execute trades, both opening them and closing them, based on predetermined parameters. This is all done without the need for human intervention.

So why use them?

One of the biggest reasons why it is that most traders lose money trying to trade forex and for that matter any kind of speculative trading is that we are creatures of emotion. Thus we trade with our emotions and that is what gets us in trouble. Greed and fear being the two most prevalent and destructive of all the emotions.

The use of these expert advisors or ea's for short has the advantage of being able to completely take the emotion out of trading. Well, almost anyway. You can at anytime of course disable the ea thus again bringing emotion back into the equation. This is not recommended.

In the beginning days of the introduction of these trading robots, they were not nearly as sophisticated as they are at present. The early ones were nothing more than common indicators and their settings translated into programs that executed trades based on whatever basket of indicators the author preferred to use.

They were still effective because of they still took the aspect of emotions out of the equation. But they suffered from the same malady that all trading systems based purely on indicators suffered...that they lagged. Because of this, they were not as successful as they could be.

These days, advancements in technology and understanding of what it takes for automatic trading to be successful has led to a new generation of trading robots that can adapt to changing markets and conditions. Thus being able to maximize profits and cut short losses to a degree never before seen!

Why is it that this advancement is important?

Markets are ever-changing. The one part of trading that humans will for the foreseen future will always have over any kind of robot is the ability to adapt our trading strategy on the fly depending on what we perceive as changes in the markets. Robots can't do this....until recently!

Much more sophisticated technology has imbued these robots with the ability to use different trading strategies depending on the market condition enabling them to trade on the fly. This combined with the emotionless trading has brought automatic trading to new heights of profitability! Claimed returns of over 80% are being realized!

Is this the "holy grail" of trading that everyone is always looking for? Really, it actually could be! Now this of course is depending on the fact that the current rules of trading will not be changed. Already, many brokers are implementing rules changes to counter these trading robots.

Why?

Because many brokers see these robots as counter-productive to their goal of making money through their clients actually making trades and thus earning them commissions. With trading robots, it's possible that there will be a dramatic decrease in the amount of trades that traders will place because they won't be opening and closing trades based on emotion anymore.

And despite denials, some brokers do in fact take opposite positions to the trades that your typical at-home trader makes based on the fact that they lose more than 95% of the time! So by using a trading robot that can possibly give returns of more than 80%, the tables are turned and the brokers who do this will lose money.

So it's no wonder that many brokers are fearful of trading robots.

Get them while you can because it's almost for sure that the rules of trading will change.