There has been a great deal of talk about Forex signals and robots. So what they are, how do they work and what are some of the benefits (and possibly some drawbacks)? Well, there is a key difference between robots, signals, and managed accounts and it has to do with whether trades are automated, initiated by professionals, or done by yourself. Should you use them? Read on…
A forex robot is a type of software tool which helps you by automatically trading the currency markets for you, meaning you don’t have to do any of the work. The more popular robots have been coded so that they can work with the platform, Meta Trader 4. This is one of the more popular trading platforms which is why people need the robots to be compatible with the platform. Such tools can be used in conjunction with expert advice, so that you can execute or exit your positons, put into place stop-losses, and otherwise safeguard your money from a high level of loss. What many people come to find out is that the manual trading operations they would normally do can be incorporated into the robot so that the same strategies used manually can be executed automatically.
A forex signal, on the other hand, is a recommendation to make a specific trade which activates a new trading position for your currencies. Signals are basically tips that you receive from professional analysists, most of the time. When you get this signal, or tip, it isn’t just “trade this” or “do that”. Instead it comes with all the details you need to know why you are getting a specific recommendation and how you should execute the trade. Signals are generally created by specialized robots or by analysists. Today it the most common to have the data sent to your smart phone, posted on social media, or emailed to you so that you can make a move immediately.
That said, Forex managed accounts are something that many people misconstrue as one of these two. Managed accounts are accounts traded by professionals. So, without any robotics or tips given to you, someone else does the trading for you. They can trade on your behalf but they cannot withdrawal or process withdrawals for you. You can monitor everything that your account manager is doing from this position. The biggest reason people use a managed account is so that they do not have the burden of being involved in the trading process but can still benefit from professional input. Basically, anyone who does not want to be in control, is not willing or able to put the time into learning the market, and is happy not to master the intricacies of the trade.
What are the benefits to using Forex signals or robots?
Well, many companies claim that the success of their product or service are features like, “unprecedented profits” or “fool proof programming”. These statements are obviously for marketing purposes and are not going to accurately give you any edge. You need to take almost all marketing or advertising comments like these with a grain of salt so that you understand what risks you are taking on when you use automated processes of any kind. Also note that if anyone claims to be completely fool proof or “guarantee” just about any type of returns, it might very well be a scam.
That said, this does not mean there are not benefits to using such services or that every robot/signal service out there is a scam. These Forex tools work well to reduce the tension of trading primarily because they take the emotions out of it. You might be a successful trader, you might have tested your strategy with a demo account and you understand the risks. All of that research, hard work, and strategy will pay off so long as you do not make emotional trades. When you let your emotions take over, that strategy falls apart. Robots can help you to avoid emotional decision making. Robots and signals also work 24/7, where you cannot. They do not get tired like people. Robots and signals do not make mistakes like humans do.
Rest assured that reliable Forex robots and signals are well tested and they work with money management strategies to help reduce your risk and improve your profits.
Vetting the Tools
Given the benefits, it is easy to see why so many traders are eager to use such services. That said, the burden of responsibility falls to your shoulders to look and see if a product is good, to verify whether it has the features you want, and to confirm that it produces profits regularly. Back-tested results are key here. Of course, historical data can be manipulated so be wary if you find that you have to adjust the settings in your tool in order to get the best results. If you have to do this, then you will be fine tuning it regularly to meet the changing environment.
You should be cognizant of the fact that scammers love the automated market. It is where they thrive. So you need to avoid any company that overwhelms you with marketing campaigns. Hard sales tactics are not the backbone of reputable software.