Forex robots gaining currency, but there are plenty of attendant risks
Tetsuhiko Saito (left), a bank executive of Japan’s Mizuho Bank, presents Japanese telecom giant Softbank’s humanoid robot Pepper with a company staff identity card during a ceremony for new bank employees at the bank’s headquarters in Tokyo on July 17, 2015. PHOTO | AFP
Conservative estimates predict that robots will eliminate 40 per cent of jobs in developed countries in the next 15 years. What’s more remarkable is that, whereas robots were originally designed to replace humans doing repetitive and predictable jobs, they are now aiming for venerated jobs that require finely tuned professionals.
Foreign exchange or forex trading is one of the latest robot’s incursion.
A forex robot —or a bot as they are commonly referred—is a software that automates forex trading decisions. They do so by scanning hundreds of forex sites, analyse buying and selling data, and generate insights that assist a trader on the best move to make a profit.
The bot’s ability to dissect data on online trading charts is by far more superior to a human being’s brainpower. Bots can crunch troves of data in seconds, a feat that is well beyond the human brain capacity, even for the smartest of human beings.
By relying on forex bots to parse trading data and offer insights, bots cushion the trader against making erratic decisions, some of which lead to losses.
Some bots are designed to trade autonomously, that is, they buy and sell currencies without human intervention using the money allocated for their use. Having a piece of software to do all the hard trading work for you sounds enticing, but a greasy pole to climb. However, powerful a bot is, it has inherent limitations. Traders must review these limitations before investing their money.
Successful forex trading requires versatility, intuition, analytical skill, and the ability to appraise diverse data sources.
Forex robots possess few or none of these attributes. They cannot discern and adapt to changing market conditions the way humans do.
Bots depend on past data to predict the future — but the past is not always a perfect predictor of the future. Misleading data can also affect the results that they produce.
Overall, bots have a bad rap when it comes to forex trading. The market is fraught with scams sold as robot forex systems — some of them even given for free or at a marginal fee.
But because there is no regulation for forex bots, traders have little room for recourse when they are scammed.
Before buying a forex robot or signing into a brokerage firm that promises to use robots to maximise your profits, Google search the bot’s name and read user reviews — they may help you make up your mind.
Also, ensure your platform is well-protected against cybersecurity by using strong passwords.
Forex trading is a complex job; it relies on a confluence of factors. No autonomous systems can replace the intelligence of a seasoned money management maven. Computer software can provide insights to help a trader decide on a trading decision but cannot insulate him from losses or guarantee profits.
