Top 7 tips on how to trade with robots


In pursuit of profits in financial markets, beginners often strive to find the Holy Grail or at least a way to make money fast and without a great deal of hassle Algorithmic trading may seem to be one of them, but it’s actually not as simple as it may seem.

In this article, we shall take a look at what a novice trader needs to know about trading robots and how to make the right choice when opting for automated trading.


1. Algorithmic Trading: Guidelines for Novice Traders
2. What Makes Algorithmic Trading so Beneficial
3. Are Robots Omnipotent
4. What Are Robots Good At
5. What Makes Algorithmic Trading Difficult
6. Tips for Novice Traders on Trading with Robots
7. Let’s Sum it Up

Algorithmic Trading: Guidelines for Novice Traders

When trading with robots, we often use the term “algorithmic trading.” In this case, the name speaks for itself.

Algorithmic trading uses a computer program that follows a given algorithm. It’s based on the rules for opening, maintaining, and closing positions, as well as techniques to find entry points and other parameters. In this case, everything is done automatically without the direct involvement of traders.

This means that traders can automate their trading strategy rules and—by using a special program—create a robot (Expert Advisor) that will trade with no help from a person.

Algorithmic trading: Advantages

What Makes Algorithmic Trading so Beneficial

We now know what algorithmic trading is. It stands to mention that profitable robots are based on profitable trading strategies. Therefore, you should think about creating a robot when you’re already trading profitably and willing to be less involved in the process.

Any manual trading—when traders open deals according to their own systems—has a number of shortcomings associated with human factors. By switching to algorithmic trading, you can practically reduce them to zero. Here are the key advantages:

1. The market is devoid of subjectivity. Each trader sees the market and perceives the price dynamics differently. When it comes to a computer algorithm, the software allows you to analyze the market thoroughly, tackle a large amount of information, and draw clear conclusions about price movements.

2. No psychological factor. When it comes to manual trading, traders are impacted by emotions that have a significant influence on the outcome. Due to fear or greed, some traders move away from their own rules, miss out on profitable trades by messing with statistics, take profits earlier, and move their stop-loss orders. Robots obviously don’t experience emotions and act according to a programmed script. This excludes a lot of mistakes in the trading process.

3. The algorithmic trading strategy turns out to be of higher quality, as it’s based on a computer program. The human capacity is limited when it comes to analyzing large data blocks quickly and efficiently. Today, market research software allows you to evaluate factors that are invisible to the human eye and do an efficient analysis in a short time. However, this doesn’t mean that the trader shouldn’t figure out how this software works.

4. High-speed analysis and reaction. Robots can analyze data, draw conclusions, and open or close deals quickly. This allows expanding your trading portfolio to the size which you wouldn’t otherwise be able to assess manually.

5. Precise entry and exit points. A person can easily make mistakes in calculations, while a robot can place an order with surgical precision. Algorithmic trading rules out any mistakes caused by the human factor, typos, and misplaced commas.

6. Your algorithm can be scaled up. With a solid Expert Advisor, you can scale it up, increase the number of traded instruments, and have additional options. In contrast, when trading manually, traders are limited by their attention and ability to analyze information.

Have you installed MT5 trading terminal yet?

If not, do so now!

Install MetaTrader 5

Are Robots Omnipotent

Forex algorithmic trading strategies are perfect in a relatively stable market. Robots, unlike humans, can quickly analyze a huge amount of information and make accurate decisions in accordance with the trading plan and terms outlined in it.

However, robots, unlike humans, can’t adjust on their own when the market changes, e.g., against the backdrop of crises, changes in a political environment, and other fundamental events. Therefore, traders need to perform certain functions and let their robots tackle the rest.

What Are Robots Good At

  • High-frequency algorithmic trading. Robots do an excellent job with high-frequency trading, as humans simply can’t execute a large number of orders in a second.
  • Scalping strategies. They’re complicated for traders, as they require the laser-sharp focus and energy that depletes over time. This has a negative impact on the results.
  • The robots’ strengths include the ability to do a statistical analysis and handle a large amount of information.
  • Robots can be used to manage large portfolios, especially when they include hundreds of assets.

Algo-trading: Here’s what you should know about trading robots

However, there are certain matters that require flexible thinking and perception and cannot be tackled without humans. These include:

1. Fundamental analysis. It’s not just about testing statistics for deviations from forecasts. You should analyze the statements made by the heads of central banks and stakeholders. Plus, you should understand the underlying meaning of what’s said (read between the lines) and assess human psychology.

2. Technical analysis. It should be noted that robots are good at this type of analysis when it comes to tracking technical patterns or models in a chart. However, technical analysis can often be biased, as each trader sees the market differently.

3. Unforeseen, extraordinary situations. They’re typically associated with some kind of force majeure event or a human factor, so only humans can assess them.

What Makes Algorithmic Trading Difficult

Even though the robots are sometimes much more efficient than humans and manual trading, they do not have the qualities of a magic wand. If you wish to use them, you need knowledge. If you’re eager to use algorithmic trading, programming should be one of your go-to skills. After all, trading expert advisors can’t work for years due to market volatility. They need to be improved and sometimes disabled. In a nutshell, automated trading requires a competent approach.

If you expect to make money fast by using a program that you’ve bought from some “algorithmic trader,” this will most likely lead to disastrous results. First of all, it’s because your robot may not be as profitable as you’ve been promised. Second of all, you need to know how to work with it.

Algorithmic trading isn’t as easy as manual trading and can be the next step on the path towards scaling up profits for those who trade well on their own. So, if you are a novice trader, the use of robots doesn’t obviate the need to complete training.

In fact, it’s quite the opposite. You’ll need to learn even more, including programming skills.

Tips for Novice Traders on Trading with Robots

If you’re a beginner, here are some tips to help you switch to trading with robots over time and scale up your profits in financial markets. Keep in mind that the first thing you need to learn is the basics. Once you’ve mastered them, you can move to more complex matters.

  • Master risk management perfectly. Learn how to minimize your risks in trades. This will allow you to start making money manually and develop a trading plan that you may automate in the long run.
  • Keep track of your trades. Successful trading systems, including robotic ones, are a series of both winning and losing trades that pay off. In other words, profitable trades exceed losses despite unprofitable positions. The same applies to robots. Many expert advisors don’t necessarily generate profits right away, and you need to learn how to analyze statistics.
  • Learn programming. To get started, you need to know MQL4. As far as novice traders go, it’s enough to develop their own robots based on their trading strategy.
  • Knowing the basics of the market is a must. You should know and understand the market well. This is the very foundation. Robots are the next step.
  • Learn how to analyze the efficiency of trading strategies. You should understand the concept of the expected value of your strategy, measure the drawdown, be able to calculate Sharpe and Calmar ratios, and analyze them.
  • Trade with robots only when you know the above like the back of your hand. Either develop an expert advisor on your own based on your tried and tested strategy or use a robot with clear trading principles.
  • Don’t switch from one robot to another.

Trading, including algorithmic one, requires consistency. Expert advisors, just like strategies, will need improvements and adjustments. And if you can’t fine-tune the first robot, the second one won’t be better.

Let’s Sum it Up

Trading with robots is beneficial when a trader has a strategy that generates profits in manual mode. It can be automated using a robot that will help you eliminate any human factor.

However, robots are no Holy Grail. You’ll have to work hard to create and adjust them before they start making money. If you’re a newbie trader, take the time to explore the market thoroughly and only then start writing a robot or trading with custom-built expert advisors.

Watch this video to learn more about algorithmic trading

Protect yourself against the trading risks

using Risk Manager brought to you by Gerchik & Co!

Learn more about the service

Useful articles:

Login in Personal Account