Emotional attachment is one of the most detrimental things to an online trader’s profitability and success. Fear, greed, hope and frustration can force traders to think irrationally and often lead to increased risk and poor trading decisions.
This is why many traders use an automated trading system, or trading robot to place orders and manage trades. They do not have the physiological impediments of human traders and have been developed to follow a defined strategy and execute trades on time, regardless of what is happening. Trading robots initiated on MetaTrader 4 (MT4) for example, will primarily use market data to identify patterns and technical indicators that can trigger buy and sell signals.
Robots have proven to be beneficial for traders who don’t have time to sit in front of their screens to analyze the markets. They can operate 24 hours a day, seven days a week and have the ability to follow often complex and sophisticated programmed strategies.
While many online trading platforms offer traders the ability to build strategies using commonly available technical indicators, some traders choose to program their indicators. Once established, the trading robot can monitor the various markets according to the trader’s strategy specifications.
When using robots, it is important to understand how they work and what they trade. Trading robots use programmed market signals to trigger buy and sell trades.
Some traders with programming skills choose to build their own robots. However, to do this, a reliable strategy must be developed and tested before deployment. This will prove useful in indicating whether the strategy has been successful in the past.
Trading robots, just like their human counterparts, will never be 100% accurate. Their function is to be profitable in the long run, and by applying market data, they can always look for the same patterns and execute trades accordingly. However, the theory with successful trading robots is that in the long run, these patterns will be profitable more often than not.
Emotional attachment is one of the most detrimental things to an online trader’s profitability and success.
Traders looking to use trading robots should make sure that the program they wish to purchase has a reliable history and track record. While this is not a sign of future success, it is proof that the robot has been profitable in the past. In addition, users also need to know who owns the robot and whether they too have a proven track record in the industry. If this information is hard to find, it is best to avoid it.