In a world where financial traders have access to an ever-increasing number of tools and techniques, it would seem that the introduction of robots into the market is inevitable.
But why should brokers look to use these types of software? What are the benefits, and how exactly do they work?
A brief history
Forex or foreign exchange trading has seen unprecedented growth in recent years as millions of people from all walks of life have sought to tap into this potentially lucrative market.
As more and more people got involved, the markets became flooded with opportunities, and brokers sought new ways to improve their bottom line; enter forex robots.
The amount of money invested in forex trading has increased exponentially over the last few years because investors can now easily purchase forex trading software that calculates the most profitable trades in a matter of minutes.
The algorithms these robots use have been designed to identify price patterns and movements. When they repeat, traders activate a trade based on the same principles as before to profit from this knowledge.
These types of software are prevalent among forex brokers because it allows them to offer clients a level of service not ever dreamed possible.
One example is 24option.com which supplies their customers with three different trading platforms, including one for automated trading where traders can employ strategies to execute their own preprogrammed set-ups.
This functionality has allowed even novice investors to achieve success in the market because there is always a robot that will make high probability trades regardless of whether someone is watching the charts or not.
One big reason they are so appealing to financial institutions; they make money no matter what.
24option is an example of a company that offers robots as part of its trading platform.
Types of robots
There are many different types of robots. Some work on particular timeframes or with specific technical indicators.
Others can be customized to suit individual needs and requirements. A good broker will offer several different versions allowing traders to choose something they feel most comfortable using, but all robots work following similar principles.
Price movement within a specific time frame creates a pattern that the software recognizes and responds to, often making trades before human eyes can even pick up on this activity.
In a nutshell, they allow clients to maximize their profits and manage their risk exposure.
Robots work best on lower time frames, where price movement tends to be more repetitive and predictable.
Still, they can also be used on higher time frames as confirmation as part of a more comprehensive trading strategy.
They allow traders to take advantage of current trends, identify potential reversals or catch runaway moves before the herd has even caught wind of what is going on.
All these tasks would previously have required an experienced trader with intimate knowledge of what to look for and when.
Now all it takes is for someone to enter their preferred time frame and choose from one of several different options that suit individual requirements; simple.
Brokers who use robots can offer their clients an unparalleled level of service.
The trading process becomes completely automated, meaning that people don’t have to watch the charts all day long. It has led to a significant increase in popularity.
Many traders choose this form of automated trading over manual management, where success is often sporadic and short-lived because so much work is involved.
The algorithms used by robots are incredibly complex.
They contain thousands of lines of code explicitly designed for one purpose, finding trends then acting on them immediately.
Unfortunately, not all robots live up to expectations. Some are poorly designed or lack good backtesting, while others are scams looking to exploit unsuspecting newbies.
There are great options out there, though, especially when you find a broker who offers a range of different robots to suit individual needs.
It gives traders a great deal more flexibility and the opportunity to choose something right for them.
As a final point, brokers participating in this market will undoubtedly have back tested their offering or at least had it independently assessed before making it available to clients.
It means people don’t have to worry about having been scammed.
Instead, they can focus on risk management and monitoring trades while adjustments can be made where necessary.