When you are learning how to trade forex, should you use a forex robot? Also known as expert advisers (EA), these robots have been heavily hyped as being able to help you make winning trades even with minimal experience. At the same time, however, these programs also have their critics who advise traders not to waste their money since these programs will not live up to their exaggerated claims. Here are some of the advantages and disadvantages of these programs so that you can decide if you should use them.
- They allow you to trade around the clock. Since there is no one centralized exchange for trading currencies, a trader can usually find a market open at any time of the day or night, five days a week. But since you may have professional responsibilities that allow you to spend a lot of time trading, you can use forex robots to do the trading for you. In fact, you can even have the robots trade while you’re sleeping and then check on the results when you wake up.
- They remove emotion from the trading process. If you are just learning how to trade forex, then you may not be aware of just how much of a pitfall a trader’s emotions can be. When he becomes anxious due to losing trades, or greedy because he is enjoying a series of winning trades, he may start to make decisions that will eventually lead to his trading account being wiped out. But this risk is eliminated with an automated trading program, since the software simply trades using the parameters that have been programmed into it.
- They have a built-in strategy. If you have limited experience with trading currencies, then you may still be trying to create a winning trading strategy. With an automated forex robot, you can simply turn on the program and then let it start trading.
- There are no guarantees that the forex robot will be profitable, despite the claims of the vendor. Since you are still learning how to trade forex, you have no way to be able to assess the trading strategy the program uses to see how effective it is.
- They can be very expensive. Forex robots are usually made available to traders on a subscription basis with monthly fees. If the forex robot does not make money for you, then the fees may not be worth it.
- They may not be as effective on days when the market is suffering high volatility. In this case, the trading program may not perform as effectively since it may not be able to adjust to quickly changing conditions.
Now that you know the pros and cons of a forex robot program, should you use one? The best advice is that you should continue to learn how to trade forex even if you choose to use a robot so that you won’t completely be dependent on it. And then when you’ve gained sufficient experience, you can start setting your own parameters in the program based on your own ideas.