What is a Forex robot and how does it work?

What is a Forex robot and how does it work?

Automated Forex trading makes use of a tool known as a Forex robot. These Forex trading robot tools are basically just a computer program or algorithm. The program scans the Forex market looking for profitable trades to take advantage of. The robot’s algorithm can be based on pre-set parameters or trading strategies and the robot can either be instructed to trade automatically on a trader’s behalf or give traders the option to enter the trade manually.

Most Forex automated trading robots use technical indicators to help find profitable Forex trading opportunities, although different robots will use different trading strategies. A Forex automated trading robot can watch movements far more efficiently than a human and they aren’t burdened with human emotion when it comes to making trading decisions.

Things we consider when choosing the best Forex auto trading robots

• Back-testing– We always look for Forex trading robots which have been back-tested on various currency pairs, and in a variety of market conditions. Back-testing shows us how the program functions in different market conditions, such as high and low volatility, announcements, and important news. It also indicates possible losses, wins, maximum drawdown, and risk-to-reward ratios. We perform back-testing on every single robot which makes it to this page. A genuine robot merchant shouldn’t mind us doing back-testing and so, if they do, they are immediately struck off our recommended list.
• Live trading results– It is common for robot sellers to promise a winning ratio of 90-99%, however, this figure can be very deceiving. In order to be certain that we only recommend the best Forex robots and auto trading software, we decipher whether this ratio is based on real-time or simulated trading. There is a big difference between results in real-time trading, where markets can be very chaotic, and simulated trading where parameters are strictly controlled. Simulated trading also doesn’t reflect liquidity, which is a crucial part of real-time trading, and simulated trading can easily be manipulated so that the Forex robot comes out a winner every time. When choosing the best Forex robots, therefore, we only select those which offer live trading results.
• Limitations regarding order size– We have tested how each robot handles a variety of order sizes to ensure that the robot is suitable for all players. Many robots work brilliantly if they stick with a certain order size, but things go awry when there is a change in order size. We check that the robot gives equal results whether the order size is 2, 20 or 200 lots, so we can rest assured that there’s no decrease in profitability.
• Drawdown– Not all traders are the same. Some prefer a drawdown of 50%, while others may prefer 25%. As we know this is a personal preference, we check the drawdown of each robot listed and tried to provide something to fit everyone. We do this on both a per-trade basis and on consecutive drawdowns.
• System credibility– We always check a good number of user reviews and testimonials before deciding whether we should recommend a certain robot. We find out how long the system has been running (ideally it should be at least a couple of years old), and how many users it has. This research helps us make sure we only suggest you use the best robots and auto trading software around

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