How Do Forex Robots Work

Technology and the investment world certainly aren’t far from each other. Ever since the world’s biggest stock exchanges switched over to digital processing in the 1980s and 90s, investors in an entire range of places have been thinking about how moving more of their trading activity online could benefit them. From online interfaces to digital trading, it’s very much a digital industry.

It’s only fitting, then, that after the world of trading and stock processing moved online, so did many of the traders. Once a discipline carried out by humans behind desks – typically those that spent half of their day on the phone – trading has moved to a digital, often automated activity. Big trades aren’t even carried out by humans often – they’re frequently calculated and performed by computers.

This is, of course, the world of stocks. But this type of automation isn’t present solely in the world of equity investment. Over the past five years, a range of automation tools have appeared that have made it possible to use a similar form of history and activity-based automation in the world’s giant currency markets. Known as ‘Forex Robots,’ they’re becoming a major hit amongst currency traders.

Many people have embraced these trading robots, using them to their fullest extent and turning four figure accounts into lucrative five and six-figure balances in the process. Others have taken them to their larger accounts, greatly increasing their net worth through little more than an automated, easy-to-manage process. Others are just beginning to use forex robots, and are already seeing results.

Then there’s the other side of the market – those who are skeptical that a robot could ever invest in a sensible way, or almost certain that these robots just aren’t effective. They do have a point. Despite a lengthy list of successes from forex robots, there are a lot of failures. Many people have lost money using a forex robot, while others have seen their entire account balance disappear from automation.

If you’d like to understand more about how forex robots work, continue reading. We really know the technology behind these machines – the engineering that keeps them running, the coding that’s used in their initial design, and the mindset behind their operation. Read on to learn more about how this type of trading robot – whether for forex markets or the stock market – makes its major trades.

It’s important to remember that robots, despite their advanced abilities, aren’t intelligent. They can’t think independently, they can’t imagine new situations, and they certainly can’t think creatively. All that they can do is carry out instructions, whether based on an algorithm – as is the case with many stock robots – or based on past performance, as is the case with these forex trading robots.

Using the analytical abilities that computers have, a forex robot looks at the past performance of a certain currency pair. Going over its short and long-term performance, it looks for trends that have occurred time and time again throughout the currency pair’s trading lifetime. It looks for troughs, for massive gains in value, and for recurring events that drive the currency’s value up or down.

This knowledge allows the robot to carry out its own trades based on the past performance of the currency pair. It makes trades based on where its data would suggest the next trend up or down is going to be. It analyzes the currency pair and invests in or against is based solely on the events in the currency pair’s past. It reads and puts the data to use, just as a savvy investor would do.

This often produces positive results – in fact, for the thousands that have used these robots, it’s been the key to some very big jumps in account value. However, it’s not a foolproof system. There isn’t a guarantee that market conditions will remain the same as they always have. Unlike a computer, the world’s economies aren’t a binary – yes or no – type of system. They’re very human and dynamic.

Because of this, there are events that exist outside of the robot’s reality, many of which can throw it out and damage its otherwise perfect investment strategy. The human element of markets – the type of activity that occurs when we hear a market is failing, for example – is something that won’t show in graphs of past performance. It’s an anomaly, and it’s impossible to explain it to a robot.

This is why, for every series of lucrative trades that a forex robot can make, it’s often thrown into the red by a single unpredicted event. A small dip in the value of a single currency – possibly one that’s driven by a political announcement, for example – can break its laser-style lock on small up and down market trends and ruin its plan. It can also quickly bankrupt the robot’s operator.

However, there is an option. The analytical power of a robot is great, often impossible to be beaten by a human. Pairing this power with a trader that’s in tune with global currency markets and able to monitor the robot can produce some positive results. However, it’s rarely, if ever, the simple, hands-free process that the many forex robots – and their advertisers, of course – make it out as being.

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