Published On: Sat, May 16th, 2020

Consequences of blindly following the trading bots

Forex trading bots and EAs have become hugely popular. The developers are creating professional bots for trading the stock market too. With the help of a trading bot, a trader can easily minimize the risk exposure as the complex calculations will be done by the programmed EAs. But this doesn’t mean you are going to win all the trades. Many rookie traders fail to make a profit because they blindly follow the trading bots. Today, we are going to discuss some of the key reasons for which you should never follow the trading bots blindly.

Ignores the sentiment of the market

Most of the trading bots ignore the sentiment of the market. As a result of this, when there is a massive shift in the sentiment of the market, the bots tend to react to the technical data. This eventually results in a series of loses and the traders become frustrated. But the smart traders always analyze the data with the manual process. They use the bots to automate a certain portion of the trading method. With the help of their trading bot, they just do the complicated calculation. But at the end of the day, they take a decision regarding which stocks to buy or sell.

photo/ Gerd Altmann

Synchronization issues

Though the majority of trading bots are designed to work well with the most popular platform the low-end platform always has a synchronization issue. As the source code of the EAs fails to operate smoothly it often results in big losses. The EA might have the formula necessary to assess the market state but it will be hard for it to assess the volatile market in the lower end broker. For this reason, the elite traders in Hong Kong prefer to buy stocks with saxotraderpro. If you trade with a good broker, you will always get access to a professional trading platform. This will reduce the risk of trading to a great extent.

Bugs in the system

Some of the trading bots are faulty. The advertisers might say this is the best trading bot and can help you to take trades in any market. But in reality, you will lose most of the trades. Unless you can analyze the signals manually generated by the trading bots, you won’t be able to take the trades in the higher time frame. This will result in bigger losses and will force you to lose most of the trades. Follow a strategic approach so that you can make a decent profit without blindly trusting the EAs or bots.

Learn to trade manually

To become a skilled stock trader, you must learn to analyze the market manually. By using the manual method of trading, you will be able to execute some of the best trades in the market. Some of you might problem with the manual analysis process. They can automate the trading process partially and improve their trade execution method. When you take the manual trade, asses the risk to reward ratio. Unless you have a 1:3 risk to reward ratio, it will be tough to make some serious profit from this market. Focus on the long term market dynamics to improve the risk to reward ratio because it helps you to boost the profit factors in trading.

Trade with long term goals

You must trade the stock market with long term goals. After getting used to the trading bots many people start taking the trades in the lower time frame. Execution of the trades in the lower time frame is very risky and often leads to disaster. To ensure the safety of your trading business, you must analyze the daily chart. Once you learn to become a position trader, things will start to make sense in real-life trading.

Author: Sheikh Hazaifa

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