It’s important to remember that signals are just recommendations to trade, alerts about market conditions or predictions of possible market outcomes. They are not guarantees that an asset will perform in a particular way, or that a predicted situation will develop. You should always balance signals against your own technical and fundamental analysis.
Robots are powerful tools that use sophisticated trading software to analyse market movements. Their algorithms and increasing use of artificial intelligence are making them popular with many traders and they are a feature of most trading platforms. Robots can also automatically trade the markets according to parameters chosen by the user. Robots typically identify new trading opportunities, execute orders, exit positions, apply stop-losses and generally practice the desired level of risk management.
As with signals, robots should be regarded as potentially useful tools that can help to increase trading opportunities and allow for convenient management of your personal trading schedule. They should never be regarded as infallible or as a substitute for effective fundamental and technical analysis. Even as trading tools become more sophisticated, new traders should always learn the very basics and understand the principles behind each tool.
1. A robot is not distracted by emotions such as stress, excitement, greed, anxiety or feelings of tiredness; problems that every human trader faces. They function in response to received data and will implement strategies as instructed.
2. Automated trading can be run against historical data to test the value of a trading strategy.
3. Automatic trading gives investors 24 hour access to any open market.
4. Traders are not limited to a single account, platform or just a few open trades.
1. Although automated trading is highly sophisticated, it is still vulnerable to system failures, computer crashes, and power losses etc. You should never rely on it entirely.
2. Trading systems that are developed using back testing can look great as theoretical models, but they can fail under real market conditions.
It’s important to use your demo account to learn how to trade effectively with automated systems, robots and signals. It’s also worth talking to your account manager and asking for one on one trading sessions if there is anything that you don’t understand.