Who wouldn’t want a piece of the $3 trillion daily market turnover in the forex market? If you are one of those new people who are learning how to be part of the forex market and are having a hard time coping, you will also receive a lot of talk about getting a forex trading robot to help you trade.
We have heard how good this system is and how many people have gained a lot by using it. But how good is it really? Is it just so perfect that we don’t want to worry about anything. Contrary to what most people think, there are downsides to forex robots.
What are these detrimental effects?
– Heavy dependence on your device
A forex robot is meant to help you, not replace you completely. A common mistake traders make is to let automated trading programs do the work for them, never putting in even small manual trades. In the long run, this can turn into a trading disaster.
If you rely too much on your equipment, what will you do if your computer crashes or your robot runs into problems? Will this be the end of your trading career? If you want to be successful in forex trading, having enough knowledge of manual trading can save it and make it really necessary.
Another thing is that most traders who use automated trading systems put their devices aside. Automated trading systems, especially forex robots, have a feature called optimization. This will allow the trader to examine previous trades and determine how past trades were won. This will allow your system to improve its procedures. However, there are times when the optimization process can be too much. It can keep improving its system until it sees no losses on the data. But this can buy time and even end up losing trades.
– Believe in its magic
There is no such thing as a perfect system. There are some forex robot systems that say they have zero loss experience. Systems that claim that this can happen actually lose their accounts. Some experts say that such systems can actually earn break-even after 20 years! This is not possible.
So, just like the first point, even if there are Forex robots that claim to have up to 95% to 100% returns, relying too much on them and letting them do the trading without the trader being involved can lead to disaster. But traders must go deeper and understand that, in reality, their accounts could end up dropping by 75 to 80 percent. Eventually, this could completely deplete their account.
– Warning Signs
Some forex robots will use poor money management strategies, such as stop losses that may be larger than their targets. Other robots don’t have any trading strategies at all! Some do not allow backtesting, which is something traders should be aware of.
The bottom line is that no automated trading system can make you millions rich overnight or in a matter of weeks. The Forex market is unpredictable and can be exciting. But to succeed in this field, miracle workers like automated trading systems are not the answer. Sure, it can help or provide the necessary support for forex trading. However, a good trading mindset and skills can still get you far.