Last Updated on 29th July 2016: The quick answer = Yes. But they are not money machines, they are simply tools that help forex traders make profitable trades. Are they 100% necessary? Of course not, but they can be worth the money and if they work well for you then scale it up.
What is a forex robot?
A forex robot is the given to a piece of software that automatically makes trades for a trader. But unlike the ads you see about “the best forex trading robot” that says they will make you hundreds of pips every day. The reality is whilst forex trading robots are valuable, they are in fact just machines, and although programmed with smart algorithms I personally wouldn’t leave one to make ALL of my trading decisions.
How do they work?
There are a number of ways robots can work. Some simply show the trader what may or may not be a profitable trade and then the trader has the final buying decision. This is a information type of robot and although valuable, are generally difficult to find. Another type are the ones that will see a potentially profitable trade and automatically short or long it. This includes stop losses and stop buys.
Do they even work?
As you’ve probably guessed, 90% of robots are complete scams. There have even been forex robot scams in the news, where people have lost thousands through trying to pick up a great currency trading robot! The main problem with robots is they are based on historical price movements and do not take into account the ever changing markets. The majority of robots are not programmed to profit in all market conditions, so whereas one robot might make a lot of money in a generally bullish market, another might lose in this same one, and vis versa.
Another note is the scam is not robots themselves, it is how they are sold to amateur traders. This robot can make up to 200 pips every day… Just because it can, doesn’t mean it does. And when these robots are under $100… Something definitely doesn’t add up.
Generally I would recommend avoiding robots. I’ve had success with a small number in the past, but that was mainly for review and testing purposes, I’ve even recommended a couple on the site. If you are an experienced trader AND have programming skills or can rely on someone with programming skills and forex knowledge, then you can create a robot for yourself. But otherwise, just let these things go.