How Much Can a Trading Robot Earn?Tuesday, 1 August 2017 22:00
A lot of traders around the world prefer an automatic trading. This type of trading involves robots (expert advisors) that use built-in trading algorithms, searching for the entry points to the market, tracking the positions, and making all the jobs instead of a trader. However, all the robots show different profits.
Features of the Advisors
On the one hand, this type of program has a number of positive features that may increase profits. The pros of such systems include the following factors:
- Robots don’t miss the good moments for opening the positions.
- The strategy is followed according to clearly defined algorithms; the emotional factor is excluded.
- Rapid response and qualitative technical analysis; work with massive data sets. This makes it possible to apply the methods that would be difficult for the trader, such as, for example, night scalping.
However, the profitability of such programs reflects all their shortcomings. Among the main disadvantages of the automatic systems is worth mentioning the following ones:
- Lack of a fundamental analysis. Within resonant economic and political events, the advisors are guided only by means of a technical analysis, which inevitably leads to losses. It’s worth noting that there are experts sufficiently resistant to the fundamental factors, but the lack of a flexible thinking makes them unable to neither take complex decisions nor understand the nature of the market.
- We mentioned the strict adherence to the strategy in the list of the advantages. However, the same fact can play against the advisor. Even if the strategy loses its effectiveness in certain conditions, the robot will still follow it, losing your money.
- Any programs sometimes lag and make errors.
To assess the real profitability of the expert, it needs to be tested for a long time. However, in addition to your own experience, you can take into account the feedbacks of other users. Many traders often publish the results of various advisors. If you haven’t chosen the program yet, you should carefully read the reviews of other users. As an example, below are the results of several common programs:
As seen from the charts, some experts show a good profit, up to 153%. However, others brought the user only losses. It’s also worth noting that some profitable robots can use the risky strategies, and then the periods of significant profit will alternate with tangible drawdowns.
Assessment of the Profitability of an Expert
As mentioned above, any expert should be tested. For such a purpose, the "Strategy Tester" function is included in the MetaTrader4 platform. You can use the archive of the real broker’s quotations, and check the decisions the expert would take. It’s possible to test the expert advisor in a real time.
Remember that a robot is an automatic trading strategy. The risks and profits directly depend on the type of a strategy. If you don’t want to risk, you shouldn’t install the experts working on the Martingale method, but you will be approached by more easygoing trend variants. If you prefer scalping, you can also find the advisors that will open many orders, and quickly respond to the successful conditions for making a deal.
Don’t forget that the profitability of the expert also depends on you. The robot can trade itself, but it cannot manage your finances according to the rules of money management. Keep tracking your deposit. If you got a good profit - it's better to withdraw this money from your account, so the robot won’t be able to lose it in the future.