Robot trading programs are a great asset to professional forex traders and the only realistic way that most new traders will ever make a profit but why is that? Forex trading robots are unlike any other trading systems because the markets they operate in are so different from others.
Stock prices can go up and stay up, Interest rates are the same way, ditto for bonds. Most other investments are linear. Their direction of movement usually dictates what the larger trend will be. That's why Martingale strategy – Where you double up after each loss fails miserably with other investments but works almost magically with Forex.
Currency prices as a normal course of business ratchet up and down fairly regularly. So double up, cashout, double up, double up, cashout works fairly regularly in Forex. Professionals do not have to play the Forex markets in this manner because they are often privy to information and data feeds that you will never see. They can make long term bets on the strength or weakness of a currency because they often have a view of the 'Big Picture'. You will not.
A pro trader will easily out trade any robot. They have technology, experience and exclusive inside information on their side but there is an equalizer. It's technology. A robot trader programmed with proper strategy can almost Brute-Force their way to profits because it's constantly in the market 100% of the time lurking and waiting to pounce.
Forex is 5.5 days per week, 24 hours per day. While a human that's armed with strategy may know to double up after the currency moves 20 points against them, will they? Where will they be when its time? Sleep, in the bathroom, driving to work, too tired to react? It's amazing how such an intellectual pursuit can become so physically draining.
My research showed that the information gap between professional traders and amateur traders is the main reason for lack of success. But just as important was the fatigue factor in hobbyist traders that traded using a technical system that required them to watch the screen 24/7.
Fatigue? Yep, tired traders. Most know what to do but since they have to be on duty to execute it they always always burn out. Hmmmm, what can execute a pretty brainless strategy, never get tired, never go off duty and never go to the bathroom? It's not hard to see that this is the type of task that computers were created for.
I've been researching and programming Forex systems for a while and it amazes me how it's often the simplest of strategies that have the most success and Martingale is so bone-headed simple that its very easy to get a computer to understand and execute it.
Who would have thought that the best strength of robot traders would be the same as Fido's. Not smart, not intelligence or even a fancy formula like E = mc2. Nope, to be your best friend it just has to be a tireless watchdog of your money.