Five Reasons Why Buying a Trading Robot is Wrong

In this post, we’ll take a look at:

Expert advisors, or the trading robots, or EAs can be considered as the pivot point of trading in the financial markets. They are beyond good because they have solved many challenges and have given a new spirit to the trades and the traders. 

 

Trading robots solve many challenges

In the traditional way, manual trading, there are always challenges never leave the traders alone. 

Emotions can be considered the most important challenge for traders. After losing one or more trades, it is almost impossible to behave normally and not get caught up in emotions. Fear of the next loss, rush, anxiety, frustration, are just some of the emotions that a trader struggles with, but with the use of trading robots, all these issues are eliminated. 

Humans are fallible. Traders may make mistakes in calculating volume, entering values, or even opening a chart. In fact, all these cases are due to lack of concentration; whilst computers are perfectly accurate in performing repetitive tasks at high speed. So, trading robots never make such mistakes. 

These were just two examples of traders’ problems. Other cases can be also mentioned. However, talking about trading robots, collaborating with these robots requires its own conditions either. 

How to have a trading robot?

  1. The first way is to create a trading robot by learning special programming languages such as MQL4/5, Java, PineScript, or EasyLanguage (for different trading platforms). Of course, for this, you must be completely proficient in programming and know what you want.

This takes time or people cannot go all the way in learning programming. 

  1. The alternative is to ask an expert programmer to build a trading robot for us. This may cost. The more complex the robot in question, the more time it will take to write it and naturally the costs will increase. 

Also, sometimes traders and programmers have challenges to understand each other’s words accurately. 

C. The third way is to buy trading robots, indicators, or scripts from various sources, such as MQL5.com market, or other sources. 

But this is wrong for assorted reasons, which will be discussed in the following four cases. 

 

Why Buying a Trading Robot is Wrong

In this article, we prove that buying a trading robot is very risky and it is strongly recommended to avoid it. 

One – How this Expert Advisor was Made?

When a trading robot is purchased, it is NOT possible to know how this trading robot is made. In other words, what was the idea behind the creation of this EA? What market is this EA made for? Who designed the trading strategy/logic of this trading robot? What indicators and oscillators does this robot use? Dozens of other questions are also remained. 

However, providers of this type of service provide complete information about robots. But this information can never be complete and comprehensive and answer all questions. 

 

An Important Question

Is the trading experience of a person in Europe the same as the experience of another trader in Asia or America? Can these two people claim to know the market equally? Are their terms of trading including time zone, trading platform, type of brokerage, access to different tools and information and resources, etc., the same?

Usually the answer is NO. Thus, how can you expect a person from one continent to buy a trading robot whose creator is from another continent or optimistically from another country with quite different conditions?

 

Two – What are the Trading Conditions of this EA?

Each market has its own features. To be more specific, each timeframe has its own features. It can be said that the smallest change in a parameter can change the course of the trading robot.

A professional trader must visualize the path for him-/herself from the beginning. What is he/she looking for? What market does he/she want to work in? Which share of the market? Which timeframe? Is his/her trading strategy short-term or long-term?

After answering these questions, we come to a more important challenge. How are we supposed to trade? Trade entry and exit conditions, profit target and stop loss, limit on the number of trades per day, more advanced concepts such as MAE and MFE (Maximum Adverse/Favorable Excursion), Return/Drawdown ratio, the maximum loss that the trading robot has seen in the backtest, the winning percentage, consecutive wins and losses, and dozens of other crucial factors must be specified. 

In summary, when the trading conditions of a trading robot is not clear, there are no reasons to entrust a lot of capital to this robot. 

 

Three – Optimization of the EA 

Market conditions are always changing, and no market is ever static. On the other hand, trading robots are not so smart that they can update themselves for the new market and upgrade their parameters without human intervention. 

What is certain is that the optimization of trading robot parameters should be done periodically. 

Once more, two important questions: first, what parameters should be optimized? Of course, we were not in the process of creating the robot, and we do not know what parameters were used and how.

The second and more important question is after how long should the parameters be optimized?

 

Four – Challenges and Frauds

It may seem strange, but sometimes there are challenges between the buyer and the provider of the trading robot, which either take a long time to resolve or may not even be resolved.

Due to the impossibility of accurately identifying people on the web, there is room for fraud and lies.

Examples of these challenges include: 

Not providing the source code of the robot; in which case it is impossible to understand how the trading robot works. If money is deposited into this robot, one must wait for luck so that the trading account remains safe in the future.

Robot crash. If there is any kind of problem with the trading robot, you will not be provided with any kind of support, or you will have to pay to fix the problem.

Copyright and product ownership issues. Any person can publish another person’s product without his/her permission without even being identified and arrested. Of course, there are mechanisms in place to prevent these actions, but they are never perfect.

Excessive cost for low profit. Sometimes, the cost of buying the source code of the robot, or renting it for a long time, is extreme, and after paying these costs, in the short or even medium term, you cannot expect to return by making profit from the trades of the robot. In fact, an amount of money has been paid, while the performance of the product is not up to the price paid.

 

Conclusion

Every work has its own principles and rules. Automating the trading process in the financial markets was a great favor that computers did. But if we want to walk in this path correctly, we must follow the rules.

Buying trading robots may help in a way and shorten the path, but its challenges will hurt the trader more.

If you want to learn this path properly, it is recommended that you get the necessary training in this regard and create trading systems for yourself in the best feasible way. 

Recommended: How to create a trading robot without programming

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