Creating an Automated Trading System ¦ South Africa

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Wouldn’t it be great to have a robot trade on your behalf and earn guaranteed profits? It’s a dream of many to find the perfect computerised trading system for automated trading that guarantees profits, and requires little input from the trader themselves. Whilst there are many automated trading systems available, there are a few burning questions which need to be answered.

Exactly what is an automated trading system? What is automated trading in Forex? Is it possible to find a profitable system? What are the advantages and disadvantages of automated trading? Are auto systems safe? This article will answer these questions and much more!

What is an Automated Trading System?

An automated trading system is a program that allows traders to set rules for entering and exiting trades. Forex traders and investors can turn exact entry, exit, and money management rules into automated Forex trading systems that enable computers to perform and monitor trades. Once those rules are programmed, their computer can automatically carry out trades according to those rules.

Trade entry and exit rules can be based on simple conditions, like a Moving Average (MA) crossover, or they can be based on sophisticated strategies that demand a comprehensive understanding of the programming language that is specific to the user’s trading platform.

Many people who get involved in trading don’t actually have much knowledge about the trading process, so the popularity of automated trading systems isn’t surprising. They are also extremely accessible, as all that’s needed is a computer with an internet connection – you don’t even need a big investment to get started.

What are EAs and Forex robots?

Automated Forex trading systems are usually grouped into two categories – Expert Advisors, or EAs, and Forex robots.

EAs are created by highly skilled and experienced professionals who write algorithms to analyse market trends and to perform the trading process. They are chosen based on their level of knowledge and accomplishments, to avoid panic or anxiety on the part of client traders.

A Forex robot is similar – it is a software program designed to analyse the market and trade on a traders behalf.

The difference between the two is that EAs don’t actively make trades, while Forex robots do. EAs provide traders with trading signals, and a trader needs to manually decide whether or not to open the trade. Forex robots, on the other hand, can take care of the entire trading process automatically.

How Does Automated Trading Work in Forex?

Whether you are a beginner or an experienced trader, you can use automated currency trading systems to make real trading decisions on your behalf.

The best automated Forex trading systems are computer programs that have been designed to analyse market activity and currency price charts. The software helps by identifying key trading signals, including all sorts of spread discrepancies, price instability patterns, news that might affect transactions, and fluctuations in currencies, all while performing your trading activities, and to keep any losses to an absolute minimum.

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The system will also locate the profitable currency pairs, and doing all of this before placing trades on them. If the software program can be set with user defined criteria (which satisfies all predetermined parameters) it can help in broadcasting a sell or buy alert, and can automatically perform the trading. This can also help in making transactions profitable.

Some automated trading platforms have strategy building ‘wizards’ that permit traders to make choices from a list of commonly accessible technical indicators, to build a set of rules that might then be automatically traded. For example, the trader could establish that a long trade will be entered as soon as the 50-day MA crosses above the 200-day MA, on a 5-minute chart of a specific trading instrument.

Users can also input the type of order (e.g market or limit) and precisely when the trade will be triggered (e.g at the open of the next bar or at the close of the bar), or they can exploit the platform’s default inputs. However, a lot of traders decide to program their own trading strategies and custom indicators, or they work closely with a programmer to design their automated trading system. Whilst this often requires more effort compared with using the platform’s wizard, it permits a much greater degree of flexibility, and the results can be considerably more rewarding.

If you are planning to program your own trading strategy, however, keep in mind that most automated trading systems require the application of software that is linked to a direct access broker, and any particular rules need to be written in that platform’s proprietary language. For instance, the most popular trading platforms: MetaTrader 4 and MetaTrader 5 use the MQL programming language, whilest the NinjaTrader platform uses the NinjaScript programming language.

As soon as the rules have been set, the computer can then monitor the markets in order to locate buy or sell opportunities based on the trading strategy, and it can then carry out auto trading. Once a trade is entered – depending on the specified rules – orders for protective stop losses, trailing stops, and also profit targets will be entered. Moreover, in fast-moving markets this immediate order entry can mean the distinction between a small loss, and a disastrous loss, in the event that a trade moves against the trader.

Can Forex robots and EAs lose?

While automated Forex systems can be a valuable tool, what must be remembered is that the majority of robots trade within a certain range. They make a particular amount of pips inside the tight range, during the slowest time on the Forex market, and they regularly set a few pip targets, and may not even use a stop-loss. They can be classed as successful, as they do tend to make profits in each trade, even if it is only a few.

When an unanticipated and strong range breakout occurs, it wipes out the small profits that they have made. Some robots which are promoted as the best Forex trading robots, can gain a profit in a positive trend, although they may lose money in a choppy FX market, so the discovery of a great trend to follow is an essential task.

However, where there is a risk of failure, a warning message is displayed, seeking approval before any transaction is made. The major advantage of a Forex auto trading system is that it is unemotional and consistent in its decisions.

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The Pros of Automated Trading and Automated Systems

Forex trading is considered as one of the premiere markets to trade, and an automated Forex trading system can help by instantly executing all Forex transactions. With the help of this software, the trader will only have to switch on the computer and let the software take care of placing trades.

So what are the benefits of these systems? Keep reading to find out.

1. Automated Forex systems are accessible

Forex automated trading systems can be used by beginners, veterans, and professionals who may find them helpful in making decisions related to trading. The software is available in different price ranges, and offers varying levels of sophistication. They also come with free demonstration models, so that users can familiarise themselves with the program before using it on their live trading account.

2. Automated systems eliminate the emotions of trading

One of the biggest attractions of strategy automation is that it can eliminate any negative or destructive emotions involved with trading, since trades are automatically placed as soon as certain criteria are met. In other words, your chosen trading software or Forex robot executes all trading processes, and opens and closes trades, while you sit back and relax.

By keeping emotions at bay, traders generally have an easier time sticking to their primary plan. As trade orders are automatically executed as soon as the trade rules have been met, traders will not have the chance to hesitate or question the trade. Additionally, automated trading can prevent overtrading (i.e. purchasing and selling at every perceived opportunity).

3. Automated systems allow you to backtest

The next advantage is the ability to backtest. Backtesting applies trading rules to historical market data in order to define the viability of the idea. When developing a system for automated trading, all rules have to be absolute, with no space for interpretation (i.e. a computer must do precisely what needs to be done without guessing).

In addition, traders can use these rules and test them on historical data prior to risking money in live trading sessions. Careful backtesting permits traders to evaluate and fine-tune a trading idea, as well as to identify the system’s expectancy – the average amount that an trader can anticipate to win (or even lose) per unit of risk.

4. Auto trading preserves discipline

Auto trading also preserves discipline. As trade rules are set and trade execution is carried out automatically, discipline is preserved even in volatile markets. Discipline is frequently lost due to emotional factors such as the fear of taking a loss, or the desire to gain a little more profit from a trade. Automated trading helps to make sure that discipline is retained, because the trading plan will be followed precisely. Additionally, pilot-error is diminished, for example, an order to purchase 100 lots will not be incorrectly entered as an order to sell 1,000 lots accordingly.

5. EAs and auto trading help with consistency

It would be a mistake not to mention that automated trading helps to achieve consistency. One of the biggest challenges in trading is to planning the next move. Even if a trading plan has the potential to be profitable enough, traders who ignore the rules alter any expectancy that the system would have actually had.

You should understand that there is no such thing as a trading plan that wins 100% of the time – losses are always a part of the game. However, losses can be psychologically harmful, so a trader who has two or three losing trades in a row may decide to skip the next trade. The next trade could have been a winner, so the trader has already ruined any expectancy the system had. Thus, automated systems enable traders to achieve consistency.

6. Automation improves order entry speed

Another benefit is improved order entry speed. As computers respond instantaneously to changing market conditions, automated systems are capable of generating orders once trade criteria are met. As a consequence, getting in or out of a trade a few seconds earlier can make a big difference in the trade’s outcome. Once a position is entered, all other orders are automatically created, including protective stop-losses and also profit targets.

You know that markets can move quickly, and it is demoralising to have a trade reach the profit target or to blow past a stop-loss level prior to the orders being entered.

7. Automated systems help diversify trading

Finally, the last advantage is that you can diversify trading. An automated trading platform allows the user to trade with multiple accounts, or different strategies simultaneously. In turn, this has the potential to spread risk over various instruments, while generating a hedge against losing positions. The software is able to scan for trading opportunities across a range of markets, to create orders, and is also able to monitor trades.

The Cons of Automated Trading and Automated Systems

Despite the advantages, you should know that automated trading is not deprived of certain disadvantages. The theory behind auto trading makes it seem rather simple: setup the software, program the rules, and watch it trade. However, the reality does not always reflect the anticipation. Automated trading is not infallible.

1. Automated systems rely on technology

Depending on the trading platform, a trade order could actually reside on a computer, and not a server. This implies that if your internet connection is lost, an order might not be sent to the market. There could also be a discrepancy between the so called hypothetical trades generated by the strategy, and the order entry platform component that turns them into real trades. The majority of traders should expect a learning curve while using automated trading systems, and it is a good idea to start with small trade sizes while the process is being refined.

2. Automated systems need to be monitored

The second con is monitoring. Though it would be magnificent to turn the computer on and leave for the day, automated trading systems require monitoring. This is due to the potential for mechanical failures, such as connectivity issues, computer crashes or power losses, and system quirks. It is possible for an auto trade system to experience anomalies that could result in missing orders, errant orders, or even duplicate orders. If the system is monitored, those events can be determined and resolved swiftly.

3. Systems can be over-optimised

And the last most apparent drawback is over-optimisation. Although not specific to auto trading systems, traders who employ backtesting techniques can produce systems that look great on paper, and perform terribly in a live market. Thereby, over-optimisation refers to excessive curve-fitting, which generates a trading plan that is unreliable in live trading.

For instance, it is possible to tweak a strategy to reach exceptional results based on the historical data on which it was tested. Trades occasionally incorrectly presume that a trading plan should have close to 100% profitable trades, or should never experience a drawdown in order to be a ‘feasible plan’. As such, established parameters can be adjusted to create a ‘near ideal’ plan, however, these will usually fail once applied to a live market.

Top 5 Questions About Automated Trading Systems

1. Is a Forex Automated Trading System Profitable?

Forex auto trading systems do not guarantee 100% profits, but they do make sure that you will benefit the most from market movements, whatever they may be. Auto Forex trading systems work in a very articulate and coherent way. Expert advisors are basically programs that comprise of the certain modules that investigate charts and figures, which move between a trader and a Forex broker.

These specially designed programs are extremely easy to handle and work with, so you don’t need any prior training in order to handle them. You just need to download the program, install it, and then adjust the settings on your computer. The automated currency trading system will then start working, and will start generating immediate results.

2. Are Forex Robots Effective?

Though FX robots promise to make beneficial trades, not all of them are what traders expect them to be.

Although they can scan millions of different charts within seconds, most often 90% will turn out incorrect information. This is understandable – because FX robots are just robots. Even though they are capable of performing highly sophisticated tasks, and many at once, every Forex robot or Forex robot free is still deprived of creative thinking. They cannot imagine what may take place in the near future, as their functionality is restricted to how they were initially programmed, as well as past performance.

For traders who use robots, they should not fully depend on it to conduct all of their trading activity. Ultimately, trading demands a considerable amount of human research and observation. Additionally, humans, and not trading software, can actually follow up with diverse economic conditions, and keep up with the news in the financial world. Forex robots, which are thought to be Forex robots that work, can solely find positive trends as well as trading signals, but occasionally their functionality is unfavourably affected by either jittery trends or false information.

Successful FX trading is based on knowledge, proficiency and skill. It involves analytical thinking, and something visual. When looking at what are Forex robots, it is clear that they cannot properly work in this manner. Market conditions tend to change all the time, and only an experienced Forex trader can distinguish between when to enter the market, or when to stay away.

3. What is the Best Automated Forex System?

Many automated Forex systems are offered for free, with extremely tempting service guarantees. However, these programs aren’t faultless. The disadvantage is that many of these systems are associated with scams. Nonetheless, the best automated Forex trading system can be safely attained if the privacy parameters programmed into the system are correctly set and checked.

It is hard to say what the best EA is, as in most cases, profitable EAs are difficult to access. There are many robots that used to be profitable. However, they are no longer relevant to current market conditions. For the most part, the best automated system to use is the one that you use for manual trading. Have it coded in MQL, this way you can substitute your own efforts with the script.

4. How Can You Get an Efficient EA?

As mentioned earlier, the best EA is the system that would do exactly what you would do, but automatically. This way you can save yourself a lot of time, and you would simply focus on the development of your trading strategy, without actually having to execute it. This is certainly a great time saver for most Forex traders.

If you are trading on a MT4 trading platform, you would need to compose your own trading robot using MQL programming language. It may be the case that you are a good trader, but have little or no programming knowledge. This isn’t a problem – there are plenty of superb, reputable MQL programmers available who will code your trading strategy and create an EA for you at a reasonable cost.

5. Are Automated Trading Systems a Scam?

The idea of having a program trade the market for you can sound too good to be true, which can lead many to wonder if it’s all a scam. In fact, some federal governments consider automated trading systems to be scams. In a similar way, you are not likely to find any article in Forbes, the Wall Street Journal, or any other respectable news source that promotes them.

What’s more, even online robot merchants try to move their robots in rank by claiming that their opponents’ ones are scams. A lot are advertised with false claims by people who have made serious money applying these systems. The truth however, is that a great number of investors and traders have lost a lot of money using so called ‘free’ Forex robots that work. There have even been circumstances in which whole accounts have been wiped out.

The biggest disadvantage of automated trading systems in the Forex market is that there are a lot of scams. The more you search for a perfect system, the higher the chance of seeing pages that promote EAs with 100% daily returns is. These pages display MetaTrader history showing how profitable the advisor is – and they usually come at a price. You can buy some software for as little as 25 USD, while some software can cost as much as 1,000 USD. Some websites will guarantee high profits, and may even offer money back guarantees. However, the vast majority of these types of EAs are unfortunately scams.

Think for yourself for a moment. Would you sell a highly profitable trading system if you could make profit with it on a managed account? Probably not. Would an efficient automated system be priced as low as 25 USD? Again, this is extremely unlikely.

Auto trading developers can potentially become millionaires. Smart designers are aware that people yearn to make a lot of money, and try to ensure that robot Forex trading appears to be one of the finest ways that they can achieve this. Nonetheless, they exploit this as a possibility to design a robot, or any other software (or even a DVD, webinar, seminar, e-book etc) to sell and prosper.

If the robots they sell could actually make a huge amount of money through trading the currencies, then what is the point in selling them to others and not utilising them on their own Forex accounts? The answer is logical – robots can barely make money for a Forex trader. Can a $99 FX robot or a free Forex robot really make hundreds or thousands of dollars every month? If it could, you have to ask yourself – would it really be sold for such a relatively low price?

It is important to be able to identify EA scams and not fall for them. Generally speaking, it is sensible to avoid anything that you have to pay for. You will not only lose the money on the software purchase, but if you are using the advisor on a live account, you could also lose your trading balance,

Conclusion

After reading this article, we hope you can now answer the following questions – what is automated trading? And what is automated Forex trading? Though automated trading may seem appealing for a variety of reasons, such systems should not be considered as a substitute for carefully executed trading.

Mechanical failures can and do occur – and systems require continual monitoring. Server-based platforms might provide a solution for traders who want to diminish the risks of mechanical failures. It is recommended by many professional traders to use a hybrid approach, consisting of manual and auto trading to achieve the best results.

If you would like to learn more about automated trading, why not read the following articles concerning automated trading in Forex?

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Introduction to Automated Trading

Wednesday, May 23, 2020

  • Forex
  • Technical Analysis
  • Trading Systems
  • Beginners

Do you know how automated trading works?

In this webinar, you will learn the basics of automated trading, its advantages over manual trading and how to use it through the MT4 platform.

• Definition of Automated Trading:
In a very didactic way, we will enter into automated trading. You will find it is not as hard as it looks. The trading rules are the same, only the tools used change.

• Advantages of Automated Trading vs. Manual
Did you know that the psychological factor affects 70% of your trading results? With automated trading we focus on the trading strategy and leave out the emotions.

• Operating in Automated: step by step
We will see the steps to follow to have an automated trading system: from the initial idea to the execution.

• Automated Trading with MetaTrader4
We will give a few basic instructions on how to use MetaTrader 4 to trade in automated trading.

• Practical Example of an Automated Trading System
Let’s get to work! We will use an example of an automated trading system; we will run it in MT4 and use it to learn about the operation of automated trading.

Alfonso Medina
Alfonso Medina is an Economics & Finance student at Bentley University and a current intern at AutoTrading Factory, a tech startup within the FinTech sector specialized in the development of automated trading systems. He is a passionate learner of the financial markets, CFA Level I candidate, and EIOC Wealth Management certificate holder.

AutoTrading Factory is a company that offers automated trading products and services to both retail customers and institutional investors. It also offers technological solutions to companies in the financial and investment sector.

In addition, we offer training for traders who are interested in automated trading but lack the knowledge to use it. We take the client by the hand to evolve to the trading of tomorrow.

Doing business in South Africa: South Africa trade and export guide

Updated 6 August 2020

This guidance was withdrawn on 12 March 2020

Department for International Trade withdrew this publication because it was out of date.

See current information to:

© Crown copyright 2020

This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]

Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.

This publication is available at https://www.gov.uk/government/publications/exporting-to-south-africa/exporting-to-south-africa

1. South Africa export overview

South Africa is a sophisticated and promising market. It has a well developed economic infrastructure and opportunities in its emerging markets.

Contact a Department for International Trade (DIT ) South Africa export adviser for a free consultation if you are interested in exporting to South Africa.

Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for South Africa.

There are many UK investors in South Africa, including well known companies like Barclays, BAE Systems, BP, British Airways, Shell, Unilever, Virgin and Vodafone.

Strengths of the South African market include:

  • large supply of natural resources
  • well established and modern infrastructure
  • well developed financial and legal services
  • fast growing black middle class

2. Challenges doing business in South Africa

While South Africa is a well developed and promising market, there are some challenges when doing business there. These include:

  • high unemployment
  • poverty
  • skills and capacity shortages
  • infrastructure improvements needed for energy, transport and water
  • high crime rate
  • Broad-Based Black Economic Empowerment (B-BBEE) legislation

3. Growth potential

South African capital markets are top rated in the world, making it easy to raise financing. South Africa has a strong services sector. The government has set up an infrastructure upgrade programme to reduce infrastructure problems in energy, transport and water. The programme should help create short term employment and help enable the economy to grow in the longer term.

The top sectors include:

  • finance
  • real estate and business services
  • general government services
  • wholesale
  • retail
  • catering and accommodation
  • manufacturing

3.1 Economic developments

The South African economy is forecast to grow at around 2% in 2020, up from 1.5% in 2020. This is expected to improve further in 2020 and 2020. However, there are still issues of unemployment, poverty and inequality.

South Africa is the most sophisticated and developed economy in Africa. South Africa is the ‘gateway to Africa’ for investors due to its:

  • comparative sophistication
  • ease of doing business
  • continental expertise
  • base for critical services for doing business in the rest of the continent

4. UK and South Africa trade

The UK is a valued trading partner for South Africa, with annual bilateral trade worth just under £10 billion. Department for International Trade (DIT ) is focusing on high value and infrastructure opportunities, which are part of the South African government’s development plan.

Top UK exports to South Africa are:

  • non-metallic mineral manufactures
  • road vehicles
  • beverages
  • medicinal and pharmaceutical products
  • petroleum and petroleum products

5. Opportunities for UK businesses in South Africa

6. Start-up considerations

The business structures available in South Africa changed in 2020 when the New Companies Act was introduced. The structures available now are:

  • private company
  • sole proprietor
  • public company
  • partnership
  • business trust
  • non-profit organisation

The private company and sole proprietor are the most common and useful structures for creating a business. Close Corporations (CC ) are no longer being registered, but CCs that existed before 2020 can continue to exist.

The choice between the various types of entity will depend on many factors, including:

  • the complexity of the business arrangement
  • if capital needs to be raised
  • the type of enterprise
  • if a joint venture is required with local partners
  • the ability to meet the South African record keeping and auditing requirements
  • the level of taxation for each type of enterprise

Trading names for companies must be registered with the Companies and Intellectual Property Commission (CIPC).

South African business and legal systems are similar to those in the UK. Labour law is governed by many acts that provide a structure for businesses to operate in. You’ll need to be familiar with some labour acts before trading in South Africa.

Contact the Department for International Trade (DIT ) team in South Africa to help find tax and legal advisers before entering into agreements.

7.1 Intellectual property (IP )

Read the Intellectual Property Office’s (IPO) guide to managing and protecting your IP in South Africa.

8. Tax and customs considerations

8.1 Tax

If a company is incorporated in or managed from South Africa, it’s considered to be South African for tax purposes. The question of residency needs to be addressed to avoid double taxation.

In South Africa, the central government levies most direct and indirect taxes. The tax regime is set by the National Treasury and managed by the South African Revenue Services (SARS ). SARS collects revenue, ensures compliance with tax laws and regulates and controls customs. The provincial governments and local authorities also have limited taxing rights.

Other taxes include:

  • stamp duty
  • customs and excise duties
  • transfer duty
  • capital gains tax
  • skills development levy

8.2 Customs

South Africa has a complex import process. SARS defines approximately 90,000 product tariff codes that are strictly enforced on all imports. You are encouraged to use a reputable customs clearance agent familiar with South African convention.

Import licenses are required for restricted items. You must have an import permit before the date of shipment. If you don’t, you may have to pay a penalty.

8.3 Documentation

You can find more about import tariffs in the Market Access Database (MADB).

9. Entry requirements

9.1 Work permits

If you start a new business, or invest in an existing business in South Africa, you must apply for a business permit. Work permits will only be issued if South African citizens with the required skills are not available.

9.2 Travel advice

If you’re travelling to South Africa for business, check the Foreign and Commonwealth Office (FCO) travel advice page beforehand.

10. Contacts

Contact the Department for International Trade (DIT ) team in South Africa for more information and advice on opportunities for doing business in South Africa.

Should You Use Automated Day Trading Software (EAs)?

Many people are lured to the markets by promises of easy money via day trading robots or expert advisors (EAs). An EA, or trading robot, is an automated trading program that runs on your computer and trades for you in your account. Selling robots and EAs online has become a huge business, but before you take you plunge there are things to consider.

There are certainly some benefits to automating a strategy, but there are also some drawbacks. The thing to keep in mind is that rarely is making a ​boatload of money easy. The promise of easy money is the oldest trading scam in the book. There is money to be made with trading robots and learning to automate strategies. Unfortunately, to this do effectively could actually take longer than simply learning how to trade manually, since a person needs to learn how to trade first, and then still learn how to automate the strategies via a programming language. And buying a program comes with loads of pitfalls, which will be discussed shortly.

Below, we look at all of this, and more, exploring the pros and cons of robotic trading and EAs.

What Is Automated or EA Software?

Automated trading software goes by a few different names, such as Expert Advisors (EAs), robotic trading, program trading, automated trading or black box trading.

Automated software is a program that runs on a computer and trades for the person running the program. Since it is a program, it will only take trades with parameters that align with what is written in the program. Creating a trading program requires extensive trading knowledge, as well as programming skills.

EAs are based on a trading strategy, so the strategy needs to be simple enough to be broken down into a series of rules that can be programmed. The more complex a strategy, the harder it will be to effectively program.

For people who buy trading software, they are completely dependent on the trading skills and programming skills of the person who wrote the program. This is a vulnerable position to be in.

Like most software, it will require an update from time to time. Market conditions change, and the trading software needs to be updated with it. If the software is not updated by someone who knows what they are doing, then it is quite likely the software will have a very short shelf life of profitability (if it was profitable, to begin with). EAs that are written by and maintained by experienced traders and programmers have the best chance at maintaining profitability over the long-term.

Beware the Sales Push

While a few EAs will work, and produce good returns, most will not. Less than 5 percent of people who attempt trading are successful at it, and that includes people who create and buy EAs. The odds of success are still very small even when using a trading robot.

The people who are successful with EAs constantly watch how their EA is performing, make adjustments as market conditions change and intervene when uncommon events occur (random events can occur that affect the programming in unexpected ways). Successful robotic traders, just like successful manual traders, put in the work required to create and maintain profitability.​

This is quite different than the EAs sold online that describes a life of easy money and no work. all for $79.95! Once you buy an EA, rarely is there support and updates after the fact. Even if the creator of the EA is successful, that doesn’t mean someone who buys the EA will be. The creator may occasionally intervene, or turn the program off (during major news events, for example). Slight changes to when the program is run can change results dramatically. Unless the creator of the program is coaching you on how to do this or providing long-term updates and monitoring as market conditions change, it’s best to avoid getting sucked into the sales pitch.

Rarely Is Automated FULLY Automated

As alluded to above, successful robotic traders put in a lot of work to creating and maintaining their programs. The real work is maintaining the program. Someone can not simply flick a switch and watch the money roll in while doing nothing. This may work for a time, but ​market conditions change and unexpected events occur, which require intervention on the part of the trader.

If a person buys an EA, it is unlikely they will have the expertise to know when to intervene and when not to. Intervening, when not required, could turn a winning strategy into a losing one, just as not intervening when required could drain the trading account in a hurry.

In the Market Wizards book series by Jack Schwager, several successful automated traders are interviewed. All these traders were highly engaged with their strategies, and not just sitting back doing nothing. It is highly unlikely that a person can buy an EA and just leave it running while they sleep and work at another job. This approach may work, but only if they stay on top of the EAs performance, have the know-how to alter the program if market conditions change and know how and when to manually intervene when required.

Some people think that robotic trading takes the emotion out of trading. Unfortunately, this is not true. While the program doesn’t feel emotion, the person running the program does. People may feel tempted to intervene when they see the program losing money, but the program may still be functioning well (losing trades happen). Or they may intervene to take profits prematurely, manually overriding a trade when the person sees a profit they like. All these emotionally-driven actions could destroy an EAs profitable edge in the market.

Automated traded is rarely auto-pilot trading. It takes a lot of knowledge to be able to maintain an EA, and trading skills/psychological skills are still required to intervene when necessary, but not too much.

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