Best Forex Robots 2021
Forex robots may be very convenient than trading forex on your own. An automated software manages all the trades for you. The forex robot may execute trades around the clock while you are busy with your daily errands.
The ‘dream’ of possessing a ‘money-making software’ with little effort is mesmerizing. Anyone would like run such a robot on the trading account no matter the costs. We will breakdown what to look out for when considering to buy a forex robot.
Automated trading can be done via a robot and via the forex broker itself. Etoro is one of the well-known forex brokers that allow traders to copy each other. They present the profits and losses that were made including statistics and other data.
Forex robots are based on a certain trading strategy or trading strategies. On most occasions the strategy is well-known with minor tweaks. It may be a crossover between Exponential Moving Averages (EMA), MACD, RSI, Stochastic Slow etc.
In ddmarkets we use multiple trading strategies such as price action, indicators and more.
We will take a deep dive into the world of forex robot trading.
Where to Buy Forex Robots?
Forex robots can be purchased online from many websites. MQL4 and MQL5 are large marketplaces where one may purchased fully automated forex robots for the MT4 or MT5.
MQL5 is gaining more popularity as it is compatible with the MetaTrader5 (MT5). You will find numerous forex signals to follow for a monthly fee. There is absolutely no guarantee profits will be made.
The other places you may purchase forex robots from are private vendors. These are robots’ developers that produced their own systems and sell it on their dedicated website.
The forex trading robots’ strategies are almost all based on technical analysis. There are some advanced systems that are more sophisticated but the price for such systems can exceed $2 million dollars.
Auto trading can have many benefits. It’s less time consuming, all the trades are managed by an algorithm and you can simply monitor the results. However, can you really profit from forex robots?
Forex Robots Price, Does it Matter?
The price of forex robots varies. There is absolutely no guarantee that trading robots that cost more money are the best forex robots out there. What really matters is the ability of the robot to perform in different market conditions.
If you have decided to pay a certain sum of money for a forex robot, you want to make sure you have some performance available. We recommend at least 2 years and explain why.
The market always changes. While to inexperienced traders it may appear the same it is not. General elections, natural disasters, interest rate cuts or hikes may alter the markets’ conditions.
When Japan was hit by a tsunami as a result of an earthquake, multiple central banks (BOE, ECB, FED, RBA etc.) coordinated a rate cut. This had a significant impact on the market’ trading conditions. Numerous forex robots realized large losses at the time.
What contributes to a profitable forex robot is its ability to adapt. Most robots will be unable to adjust without updates from the developers. You are therefore relying on the developers’ ability to adjust the algorithm of the robot. Some do succeed and some do not.
During 2 years the robot should have placed trades in multiple market conditions. It may allow you to have some insights into the robot’s ability to recover from losses and how it adjusted to the market (with the aid of the developers).
To conclude, the price may not reflect in big profits. A 2-year performance may provide some indication.
Profitable Forex Robots
All paid forex robots will show that profits were made. The main concern are not the profits that were made but the profits that will be made. No one can vouch that you will profit from the robot as soon as you start. However, there are several indicators that are worth paying attention to.
1. Stop Loss Orders
True technical traders use technical tools to place their stops. There are many forex indicators that can be used for it. Having the robot determining the stop loss based on various indicators is rare. Many robots simply use a fixed stop.
A fixed stop loss may be 95 pips in EURUSD for example. No matter what the technical indicators that robot used for the forex trade, it will always be 95 pips.
Going back to the market conditions we discussed earlier, there will be times when a smaller or greater stop loss is needed. Fixed stops are not a red flag but it means the robot may require consistent monitoring.
There was a famous trading robot that used a 1,000 pips stop and a 10 pip take profit order. The robot had a very high success rate (as you may imagine) until it didn’t. Size of the stops do matter regardless of the leverage.
2. Take Profit
Risking 95 pips in the stop loss order and targeting 1 pip as a profit is unwise. If 1 trade hits the stop, the robot will require to have 95 successful trades in order to recover 1 loss.
It is important to pay attention to how many pips does the robot aims to target per trade. Rule of thumb, if the stop loss is greater than the take profit it may be a warning signal. Once the robot posts consecutive losses (which is likely to happen even to the best forex robots) it may struggle to recover.
To conclude, the target (take profit or tp) should be greater than the size of the stop loss.
3. Leveraging Losses
Certain robots are programmed to recover from losses as soon as possible. If for example a 50 pips loss made in 0.10 lots trade (or 10,000 units), the algorithm may place a 0.20 lots trade so only 25 pips will be required to cover the loss.
Of course, the robot may place a trade of 1 lot, which would then only require 5 pips to breakeven on the 50 pips loss. This type of behavior can be destructive.
If the forex robot posts consecutive losses it may wipe the account. Although the robot may not attempt this at the beginning, the developers can release an update that will instruct the robot to do so. At the end of the day robots that only realize profits without losses are the most attractive to the inexperienced.
Scalping is a trading strategy that is used to target anywhere between 2 pips – 10 pips. Scalping is popular in platforms where the main trader is compensated from the trading volume. The more trades he places, the more he is paid.
It is easier for trader or a robot to lose control in scalping then in swing trading (where the trades are kept open for several days). If there are consecutive losses due to poor market conditions, the losses may be greater than anticipated.
If you decided paying for a scalping forex robot (EURUSD is the most popular) you must be aware of the market conditions and know when to stop the robot from trading for several hours or several days. It does require a large of amount of trading experience.
Like any market, the easiest way to deceive inexperienced forex traders is by profits. We will not discuss all the techniques that are used as we do not wish to inspire to wrong audience. One popular method is by backtesting.
All that is required is to look at the past 5 years, adjust the EA until mostly profits are made and present as a ‘bulletproof’ robot. This is why a live 2-year performance is needed. Even if the developer only wishes to show profits at the cost of significant drawdown such as 50%, it may be difficult to hide in a 2-year track record.
There are many forex robot reviews available online, positive and negative. The above may allow you to determine on your own the quality of the algorithm and discovering the best forex robot in 2021.
4. Free Forex Robots
Free is always preferred by many. The concern with free forex robots is are they updated accordingly? It is likely that free trading robots will outperform under certain market conditions. When the market changes however and it be for a long time, are there any updates?
If you wish to gamble with your money then you can experiment with free robots. It is important to stress that paying for robots may not necessarily work as expected either.
As we wrote earlier, it is important to see the robot can handle the changing markets’ conditions.
Forex Robots Trading Tips
There are many popular forex robots that work on many platforms such as MT4 and Ninjatrader. Below are some useful tips for choosing the best forex robots.
The first mistake in our opinion is the profit. Seeing trading results such as +500% ROI or +2,000% ROI is very attractive. You need to literally dig into the trading history, drawdown, trade sizes, stops, take profits and duration.
It does require some time but it is important. If there is consistency, the system demonstrates its ability to recover without doubling or tripling the trade size it may be worth looking into.
In the case of eToro, at the time of this writing, 67% of the trading accounts with this broker lose money. It is published on their website. It is simply not enough to copy trades and fully rely on the trader.
If you have used forex robots or copied other traders with poor results, you may try ddmarkets forex signals. All trades are sent via email, the trade size is determined by you a well as the ability to dismiss trades. There are stops for every trade as well as daily updates.
Semi Automated Robots
There is a choice between fully automated systems to semi automated robots. In a fully automated environment, the robot opens and closes trades as it wishes. In a semi-automated systems the robot signals when to buy or sell. It is then the trader’s decision whether to place trade.
One of the drawbacks to semi automated robots or indicators is repainting. On many systems the signal is provided with an arrow. Green arrow is for buying and red arrow is for selling. If the system was incorrect, the arrow is corrected.
Repainting is done to show how successful the forex robot is. In circumstances when there is no repainting, market conditions would still influence the trading results.
Some vendors take a free trading indicator that is available online, tweak the code and sell it as there own. It may be a challenge to find reliable trading robots, ensure to thoroughly test the system.
Forex Robots for New Traders
New forex traders that start using trading robots, some trading experience is required. Even though the robot manages all trades, some trading knowledge and experience are required. The robot does not explain why it decided to sell or buy Euro Dollar.
One of the trading skills that is required is knowing which market conditions are negative for the trading system. If the forex trading strategy is unknown, it is a challenge to discover the appropriate trading terms.
Maintaining a forex robot requires indepth understanding of the markets. What fundamental events can affect the currencies, what trading session are best for the forex robot, does volatility causes more losses etc.
Some robots may perform better on specific currency pairs. Better results may be made in AUDJPY than EURJPY or GBPUSD for example.
To conclude, forex robots may be a great tool for trading. Highly skilled traders may benefit the most from auto trading. There are market conditions where the robot will fail.
Adjustments must be made to the system to match the current market conditions. It is important to understand the forex strategy of the robot. Profits and backtesting are insufficient to be a profitability factor.
For new forex traders (and even experienced traders), trading with manual signals has its benefits.