What does a Trading Robot or automatic trading mean? It’s a type of trading where a trader doesn’t physically open any trade, instead it’s a program trading for them.
A lot of beginners, but also many expert traders are using this new trading technique which grew in popularity over the past few years thanks to the introduction of new software or “Expert Advisors”.
How does a trading robot work?
A trading robot is a software developed by experts which can make decisions on the market based on the analysis of different patterns and the use of indicators.
For instance its code could be: ‘if the markets drops more than the 4%, then sell it’. Usually a trading robot is developed in the same code as the Metatrader platform.
The quality of a trading robot depends on different factors:
- the developer must know how the financial world works
- the developer should know how to code to avoid any kind of errors
Every trading robot allows the trader to set the level of risk they want to take in their trades, the leverage, the maximum margin and the amount of money to trade for every single investment.
The chosen risk will be used to set up the levels of stop loss and take profit in each trade.
Does a trading robot work?
There are different opinions about trading robots. There are also many types of trading robots to choose from.
What we can say though is that it’s a very good help for traders who haven’t got much time to trade by themselves, or don’t have enough experience.
Two of the most popular aspects of using a robot for a trader is firstly that they easily scan multiple charts and figures in a manner that is impossible for humans. Accessing so much information in a super fast amount of time opens up the chance of more data being assessed, compared to what a human trader could go through.
Secondly another possible bonus of using a robot is that they’re implanted with signal codes for trading, which allows them to suggest ways to find profitable trades in uncertain markets, as well as determining when to trade or not to trade.
However, it’s very important to choose a good product depending on other traders reviews and on the prices. In this field the quality level is normally reflective in the product price.
It is important to remember though that when it comes to human vs machine, that machines such as trading robots are not perfect, they can also make errors occasionally. That’s why it’s really a personal choice of whether a trader feels comfortable using a trading robot or not.
What we would suggest is to research and read very well all the available reviews before buying a product. Plus if there is a free trial of the trading robot to test it first to see if it’s suitable for you.
Otherwise it’s always better to invest your time in developing your knowledge and experience in order to trade by yourself.
To start developing your trading skills, the best thing to do is to learn how to trade and how the main trading strategies work.