Forex trading bots are computer programmed to execute trades based on forex trading signals. Artificial intelligence is used in these bots and known as AI-driven forex trading bots. They read trading signals which help them understand when to buy or sell a particular trade in the market.
These AI-driven forex trading bots are not used by small or retail traders rather they are used by large players of the market. Even with small price changes traders can fetch high profits because of the quick purchase and selling ability of bots.
Working of Forex Trading Bots
Trading software is programmed and inserted into those bots. So, they can recognize trading signals and place trades in the market. These AI-driven forex trading bots are limited in their capabilities as they are programmed and they are not humans.
The most used platform for building bots is MetaTrader 4 using the scripting language that is MQL. Before using a trading bot you should test it, just to ensure that it is performing all the activities without any interference.
Trading bots are a good solution for short-term trading but they cannot maintain the same percentage of income in the long term. Hence, it is better to use them in short-term trading for better performance.
Are Forex Trading Bots Profitable?
These trading bots are designed to assist traders in getting higher profits from their trading actions. The trading bots do not have any emotions. Thus, human emotions can be ignored using forex trading bots.
But to get maximum profits traders should understand the working mechanism of the bots. They can trade throughout the day and night. Usually, they can generate high profits with short terms deals rather than long term deals.
Hence, it is recommended to all traders, understand the mechanism of trading bots to earn higher profits. Also, use them for short term trades and make quick profits from them.
Advantages of Using Trading Bots
There are multiple benefits of trading using AI-driven trading bots. Traders should understand the benefits they can achieve from trading. The advantages are:
Diversifying Trades
Traders can use various trading strategies in a single time with trading bots. They can spread the risk over a variety of trades rather than putting all risk in a single trade. This requires comparing different trades and positions.
Humans cannot evaluate all the trading positions at a glance, it is easy for bots to trade across different trading opportunities. They monitor all of the market quickly and grab the best opportunities to earn the highest profits.
Minimal Emotions
Traders emotions can be minimised as trading bots do not run on human emotions. All the trading actions are taken without considering a single emotion. Therefore, automated trading can grab the best results from the forex market.
Trading bots can grab the opportunity which traders might find not suitable according to their trading requirements. Bots do not hesitate in placing trades like a human and that is the reason that at some points they can earn higher profits.
Backtesting
Traders can set parameters as well as design automated trading according to their requirements. Place all the rules for trading and test it based on historic market data and conditions.
Before practising trading bots in the market you can backtest them for better results. Backtesting reduces the exposure to risk as you are sure that the trading bots designed or programmed are fetching good profits.
Improved Trading Speed
We all know that the response time of a machine or computer is faster than a human being. Due to this reason, trading bots can generate higher returns from the market that is hard for a trader manually.
Trading bots can enter and exit trade positions quickly as compared to traders. This speed of trading makes a quick difference in the profits earned by a human and a trading bot. Profits can even be targeted by putting stop-loss and other limits on the trades.
Disciplined Trading
Discipline in trading is the most important thing and even in volatile markets traders can make huge profits by discipline. Trading bots can maintain discipline in the market whereas trades can lose it due to emotional factors.
The ability to take risk can bring huge profits from the market. Traders change their trading strategies and plan with the changing market conditions. On the other hand, trading bots stick to plan and fetch profits from the forex market.
Use Regulated Brokers
Traders can use these brokers, they run on the MetaTrader 4 trading platform. Trading bot creation is quite easy on this platform. These brokers are also offering demo accounts along with educational material and trading tools. The brokers are:
- HFTrading
- ABInvesting
- TradedWell
The Bottom Line
AI-driven forex trading bots can be used by traders for automated trading. They can grab higher profits from the market as compared to manual trading. These bots are used by professional traders and not commonly by retail traders. The reason is that retail traders trade with low quantity. Use a good broker and design a trading bot for better profits.
