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Pros and Cons of Forex Trading with Robots Hey traders, Forex trading robots (EA) are commonly perceived as a sort of magic button. Once it is clicked, the system starts trading automagically, generating consistent profits. What can be better? However, many pitfalls are hidden behind its simplicity. In this educational article, we will discuss the advantages and disadvantages / pros and cons of trading with Expert Advisers (EA) / robots. Advantages of Forex Trading Robots Let's start with the positives ➕: 1. The first major advantage of EA is the fact that it works 24/7 , without delays and coffee breaks. Once it is launched, it will keep working till you stop it. 2. The second advantage of EA is that it is non-emotional and objective . It strictly follows the algorithm and rules determined by a program. It is not influenced by psychological biases, making each trade extremely precise. 3. The third strength of trading robots is the processing speed and its limitless scalability . EA can monitor dozens of trading instruments on multiple time frames simultaneously, not missing any bit of information. Hence, it requires less time for decision-making and trade execution. 4. The fourth advantage of EA is the simplicity of its backtesting . Once the algorithm is written and the order of execution rules are described, it can be quickly and easily tested on a historical data. Disadvantages of Forex Trading Robots So far, sounds like a panacea, right?! But now, let's discuss the negatives ➖: 1. Similar to any software, app or program, the EA is vulnerable to bugs, and may occasionally lag . Therefore, it requires a constant oversight and maintenance . In order to fix the bugs and maintain that, a high level of experience is required . One should have the advanced skills both in coding and in trading. 2. Moreover, admitting the fact that the market is constantly changing and evolving, one should regularly update the EA and adapt it. In comparison to humans, trading robots are not learning, they do not evolve, update themselves. 3. Leaving the robot without supervision, updates and patches, it may blow the entire account in a glimpse of an eye without any embarrassment. 4. One more important thing to add about EA, is the fact that it is technical analysis based . For now, there are no solutions on the market that would allow the integration of fundamentals in the algorithm. Unfortunately, most of the traders overestimate the strengths of trading robots, completely neglecting its obvious weaknesses. If you decide to apply EA in Forex trading, always consider its pros and cons that we discuss in the post.
OANDA:XAUUSDEducation
by VasilyTrader
1
Navigating Past Waters: BacktestingNavigating Past Waters: A Guide to Backtesting Trading Strategies Introduction Backtesting trading strategies is an essential step for traders who wish to improve their market performance. This process involves applying a trading strategy to historical data to evaluate its viability and profitability. Here, we’ll explore the importance of backtesting, the steps involved, and the considerations traders should keep in mind. Importance of Backtesting Backtesting is pivotal for several reasons: Risk Reduction : It helps traders understand potential risks and returns, allowing them to adjust their strategies accordingly. Strategy Refinement: Traders can optimize their strategies by analyzing various parameters and their effects on performance. Increased Confidence: Understanding how a strategy would have performed historically can build traders’ confidence in their approach. Steps for Backtesting Trading Strategies 1. Define Strategy: Clearly articulate the trading strategy, including entry and exit signals, risk management rules, and other relevant parameters. 2. Select Historical Data: Choose historical price data that is high in quality and relevant to your trading time frame. 3. Code the Strategy: Translate your trading rules into code, using a programming language compatible with your backtesting platform. 4. Run the Backtest: Apply the coded strategy to the selected historical data and run the backtest, taking note of performance metrics. 5. Analyze Results: Evaluate the performance and risk metrics, such as the maximum drawdown, Sharpe ratio, and total returns. 6. Optimize & Refine: Adjust strategy parameters and run the backtest again to optimize performance. Considerations When Backtesting Data Snooping Bias: Be aware of the risk of overfitting, where the strategy performs well on historical data but fails with future price movements. Survivorship Bias: Ensure that the historical data used includes all assets available during that period, not just those that have 'survived' until the present. Liquidity Concerns: Take into account the liquidity of the assets you are testing, as it can impact the strategy’s execution. Transaction Costs: Incorporate transaction costs, including spreads, commissions, and slippage, to get a more accurate picture of potential profits and losses. Best Practices Use Adequate Data: More extensive data sets can provide a more accurate representation of a strategy’s potential. Start Simple: Begin with straightforward strategies before gradually incorporating complexity. Conduct Out-of-Sample Testing: Validate your strategy using data that was not included in the initial backtesting phase. Stay Skeptical: Remember that past performance is not indicative of future results, and approach backtesting results with a healthy dose of skepticism. Conclusion Backtesting trading strategies is a crucial, proactive measure that traders can employ to gauge the effectiveness of their trading plans before deploying them in live markets. While the process is invaluable, traders must be conscious of its limitations and biases. Through careful and critical backtesting, traders can refine and optimize their strategies, improving their chances of success in the fast-paced and ever-changing financial markets. Whether a novice trader or a seasoned market veteran, backtesting is a vital tool in every successful trader's toolkit.
BLACKBULL:SPX500Education
by JS_TechTrading
Trading With Robots (EA) | Your Pros & Cons 🤖 Hey traders, Trading robots are commonly perceived as a sort of magic button. Once it is clicked, the system starts trading automagically, generating consistent profits. What can be better? However, many pitfalls are hidden behind its simplicity. In this educational article, we will discuss the advantages and disadvantages of trading with Expert Advisers (EA) / robots. Let's start with the positives ➕: The first major advantage of EA is the fact that it works 24/7, without delays and coffee breaks. Once it is launched, it will keep working till you stop it. The second advantage of EA is that it is non-emotional and objective. It strictly follows the algorithm and rules determined by a program. It is not influenced by psychological biases, making each trade extremely precise. The third strength of trading robots is the processing speed and its limitless scalability. EA can monitor dozens of trading instruments on multiple time frames simultaneously, not missing any bit of information. Hence, it requires less time for decision-making and trade execution. The fourth advantage of EA is the simplicity of its backtesting. Once the algorithm is written and the order execution rules are described, they can be quickly and easily tested on a historical data. So far, sounds like a panacea, right?! But now, let's discuss the negatives ➖: Similar to any software, app or program, the EA is vulnerable to bugs, and may occasionally lag. Therefore, it requires a constant oversight and maintenance. In order to fix the bugs and maintain that, a high level of experience is required. One should have the advanced skills both in coding and in trading. Moreover, admitting the fact that the market is constantly changing and evolving, one should regularly update the EA and adapt it. In comparison to humans, trading robots are not learning, they do not evolve themselves. Leaving the robot without supervision, updates and patches, it may blow the entire account in a glimpse of an eye without any embarrassment. One more important thing to add about EA, is the fact that it is technical analysis based. For now, there are no solutions on the market that would allow the integration of fundamentals in the algorithm. Unfortunately, most of the traders overestimate the strengths of trading robots, completely neglecting its obvious weaknesses. If you decide to apply EA in trading, always consider its pros and cons that we discuss in the post. ❤️Please, support my work with like, thank you!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
8
How to auto-execute TradingView alerts on exchangeIf you have your own strategy in TradingView, you can set up opening trades on the exchange in a couple of clicks. Next, you’ll see an example of how we set up alerts in 5 minutes, and how orders were opened and closed on the exchange. To do this, we will create alerts and a bot for alerts on our platform. Step 1. Set the alert parameters. Go to our terminal, select the Algotrading section → Trading Robots → Add strategy button. You will see an interface for creating and customizing your bot, where you need to perform the Basic settings and proceed to setting the parameters for sending signals to the system. To do this, go to the Sending signals block. The TradingView signal source is already selected. Copy the Request URL. On the right side of the window, we see the code with the request parameters. You can add other parameters with checkboxes, we have added Stop Loss and Take Profit. Copy and save the code. Step 2. Launch the bot. Next, find the created bot in the All robots section and launch it in Work trading mode according to the manuals in the terminal. Step 3. Set up an alert in TradingView. Go to TradingView, open the Alerts section and set up an alert, for example, for opening an order (Buy) based on a simple indicator - in our case, Crossing. Paste the code that we got in Step 1 in the Message field. Paste the request URL we got in Step 1 in the Webhook URL field and Save. The alert has been successfully created and is active on TradingView in the Alerts section. Step 4. Monitor the orders. The alert triggers and ... Go to the Alerts log, where we see a notification about executed alerts from TradingView. We can check in the bot on our platform, open the Trades tab - we see open orders. And we see that alert orders are open on the exchange. Since we set Stop Loss and Take Profit, the orders were not only opened, but also closed. In the platform we can find deals, on the exchange we can find orders with the Sell parameter. We hope that now trading with TradingView will become even easier. We will release new and more detailed articles for you on using webhooks so that the strategy created here works 24/7 without your participation.
Education
by Crypto_robotics
11
Do Robots (including Expert Advisors) work?> Robot you code yourself -> Risk Taking -> Market making/arbitrage In both cases the robot will likely not be overly simple. You will need to know a thing or two about programming. Learning to trade is like getting a degree, learning to code is like getting a second one. -> Risk Taking This may very well work. I do not know of anyone that does this and is profitable over more than just a few lucky months, but does not mean it does not exist. I have heard of people that tried it, even people that told me they would let me know how it went they swore they cracked it, have not heard a word since then. Also, myfxbook is full of automated systems that end up blowing up. If it is possible, you have to monitor the market all the time, be careful about events, look for evolving conditions. I do not see how a fully autonomous robot - you can go to holidays and come back and find money in your account - could be programmed. Would be so complex... Are there any profitable traders that are interested in this? -> MM & Arb There are plenty of hft and quant firms out there. Among other things they buy order flow from Robinhood and soon other "zero commission" brokers. Old market makers that did not want to move to algos just quit and did something new. I see them mostly as mm or parasites. They can be so anoying. I used to market make on crypto 2 years ago, the parasite would just jump in front me all the time. Any order I place he'd hop 0.0001 higher/lower. Front running bots. It's not all front running bots of course. Soros & Jim Simons (I think) run statistical arbitrage funds. Computer farms to treat a ton of data help. It works obviously. For stat arb you will need: Learn the basics about the market (6 month course), an intermediate programming degree (1 year), a statistics phd (8 years). Good luck. For market making you will need: Learn a bit more than the basics about the market (1 year, don't need the speculating course), a programming degree (1 year). I am being nice with the numbers I think. > Fully automated robot you purchase Pros and Cons Also, I don't even know how it is legal, it's pretty dangerous. They sell you some fairy dust and also you get advised to "hold on" "do not be emotional with fear just hold" "be strong during drawdowns they are normal" it's actually risible. New traders that might be a little gullible, a little greedy too will end up with some fairy dust that is guarenteed to bring their account to zero, they do not understand the markets, AND to top that, they hear that they should not panic about losses and just persevere because drawdowns are normal and they are just experiencing fear, this is what will make them lose, and this is what the robot is here to fix. "Just trust". What you have here is a recipe for disaster. > Robot that executes for you/semi automatic Why not? I see a few possible uses: - You want to buy alot of shares of a small company long term, you set a bot to purchase some each time the stock has a strong down momentum with volume (fills you without moving the market) - You want to sleep / take a few days off, you run an algo that will move your stop loss each time the price goes up, would not be too hard to say "use the smallest of EMA 20 0.236 ATR something else, if consolidates move closer, if price == .... then do this, ifelse the price surges then move my SL closer" etc. - You could have a feel for the market and be very bullish, just set a bot to buy an inside bar bull break with a couple of conditions, or a pullback of a certain % but still above a certain level/MA followed by a pin bar. Sets and trails the stop loss too until you intervene because conditions have changed and you do not want to stay in or whatever reason. - Big one: monitors correlations for you. I'd actually recommend that. A robot to warn you of your global portfolio correlation, maximum risk, and makes some recommendation (shows what are you most correlated positions making a problem, and lists stocks/currencies/futures that are uncorrelated or negatively correlated) > Robot that alerts you Plenty of people use that. Makes perfect sense. Something just warns you when the price does something particular or whatever. I myself mostly use trading view price alerts. I just set an alert on Bitcoin MA50 & MA200 makign a death cross, should fire up by Halloween. I would not go overboard on this for "advanced" things, because it could get complicated, and a quick glance is even better anyway, you want to focus on what pops out "obviously", you want to see what other people are seeing on the chart. You may want to be long on certain currencies, the bot could tell you when the price is starting a pullback... > Indicator (sold) There are people that dish out indicators and show people "See? Here, here, and here, my indicator fired a signal right before Bitcoin went up", and people actually get excited by it and want to purchase... And guess what? It works extremely well with crypto enthusiasts that invested in imaginary magic internet beans. Who would have thought they were gullible and dreamt of easy money fall out of the sky? The coders use the right combination of indicators, for example EMAs and candlesticks, to generate great signals IN THE PAST. I made such an indicator myself just to show it's bollocks. I think some people still used it seriously. Black box "predict the future" nonsense ==> Obvious scam. So watch out for those. If you are interested in something, make sure you understand WHAT IT DOES. Example: If the indicator provides you with order book info and idk things like this that you don't have with your broker and charting service, it obviously has value...
Education
by MrRenev
1