Forex Robots

4/7/16

Forex is the foreign currency exchange. It is a huge, essentially 24/7, highly liquid, low fee market, where investors/traders (the distinction depends on your preference for risk, timeframe, goals, frequency of trading, philosophy, etc.) buy/sell currency pairs, essentially ratios, like EUR/USD (Euro / US Dollar), for example.

Traders can carry out their trading manually, or automatically, or some combination of the two. A manual trade is when the trader places their own order. An automatic trade is one done by a Forex "robot", basically a computer program (an "expert advisor" or "ea" in MT4/MT5 lingo). A combination of manual and automatic, I guess semi-automatic, would be using a computer program to trigger a buy/sell signal which would notify the trader who would then place the trade. This article is about my short experience with automatic trading.

So far, I think automatic trading is great. Maybe I'm saying that because I am in the green, but I've noticed a few things that I'd like to share.

First, I do not need to be in front of the monitor nearly as much, freeing up valuable time to spend with family or do other things.

Second, automatic trading almost totally takes the emotion out of trading. I no longer obsess on wins and losses, but just let the process happen.

Last, it has changed my views on trading in general. Automatic trading changed my view of all traders as day traders, to trading being a structured long-term approach with a risk and money management overlay.

One common complaint is that this type of trading removes the trader from the process. This critique against automatic trading is wrong in my opinion. Using robots in your trading can actually, and paradoxically, "remove the veil" from trading somewhat, because you can look at and modify the code. You can also fully explore and test ideas on real data, both backward and forward in time. There is also less lag between signal and trade executed, so the trader is, again, paradoxically, more involved in trading.

Automatic trading, however, has created an interesting field of meta-trading. That is, people are now essentially trading code to do trading.