Global stock market players have become more active. Self-isolation and telecommuting have allowed people to make time for trading. In addition, bank deposit rates have decreased, which has made deposits unprofitable. The development of marketplaces and online financial management services are also attracting people to trading.
How the Forex market works
Forex (Foreign Exchange) is a global financial market, the participants of which are major banks, financial institutions, and private investors. In addition, Forex is a platform for making deals on the increase or decrease of a currency rate through dealers.
Those who trade on Forex predict the changes in an exchange rate between two currencies by making a bet with a dealer. If the forecast is correct, you benefit – if not, the dealer withdraws a certain amount from your account. The dealers charge a commission fee for their job.
What a trading robot does
A robot is an automated program that collects relevant financial information and analyzes how different events influence the changes in the market. In the case of Forex, that means the changes in currency exchange rates.
The program provides a trader with the data needed for making a decision concerning the deal. Fully automated robots are able to make deals independently.
Robot selection criteria
In 2008, automated trading programs were first applied in the financial market. Trading robots are constantly improving due to technology development and tough competition.
Today, there is a large variety of such programs, hence it’s not always easy for the market players to choose the most suitable one. An estimate found on a reliable source like Myfxbook can help. There, experts compile reviews and comparisons of robots.
According to NuWire Investor, an investment news portal, the top online robots in 2021 are RoFx, Forex Diamond, Happy Forex, FX Track Pro, and Premium FX Bot. Such rankings are usually made by analyzing several metrics, among which are:
- real-time trading results;
- drawdown (low drawdown is preferable, i.e. a low gain along with minor risks);
- trading strategy;
- payoff policy, etc.
When choosing a platform, it is recommended to test its features first, using a demo account. There are lots of fake platforms where people can lose their money, therefore, beware of fraud. To avoid this, give up using the robot at the first red flags, for example, if you can’t withdraw the funds after you place the money, if there is no profit, and so on.
Can one make money using Forex robots?
Trading robots have their pros and cons. Some financial experts doubt the overall efficiency of the automated platforms. The advantages of trading robots include:
- 24/7 operation,
- availability for newbies in trading (unlike manual trading that requires sufficient knowledge and experience),
- preciseness while analyzing large volumes of information and consistency,
- a free trial version to test the tool,
- absence of human factor or influence of emotions when making decisions,
- use of tried trading strategies.
The situation in the market changes all the time, requiring flexibility from traders. One shouldn’t stake everything on online robots. Such platforms are most applicable for solving issues in real-time.
The advantage of these robots lies in their ability to analyze large volumes of data about the market, including financial news and changes in the geopolitical situation. Having a certain level of competency, you may succeed in stock trading by skillfully applying trading platforms’ capabilities.