This could be considered a follow up to my last post, You Don't Need To Be A Trader!!, feel free to check it out.
So, if you decide that trading is not your thing and it’s best for you to move on and explore other careers, does that mean there is no other way to make money from these high volume markets? Well, not necessarily.
Trading bots have been around for quite a while now, and they’ve been hit and miss for the most part(to be fair, more miss than hit!) but if you do your research well, and don’t have unrealistic expectations, then maybe you can find one that works for you.
I’ve used trading bots before and all of them lost money and two even margin called my account except for one that I’m currently using and had an overall good result with.
So when I say do your own research and proceed with caution, you better listen!
Now you might ask, why do I even bother with these bots if they don’t work well most of the time? Well, because the ones that do work well can improve your financial life drastically! But IF you find a good one!
While we’re talking about indirect ways to make profit from financial markets, it’s only fair to at least mention the other most common way of doing it, Copy Trading.
Copy trading enables individuals in the financial markets to automatically copy positions opened and managed by other selected individuals. https://en.wikipedia.org/wiki/Copy_trading
Because copy trading is not the subject of this post, we will leave it at its Wikipedia definition except for this: No! It’s no guarantee that you will be profitable in copy trading, even if you copy the best traders that you can find, they may still lose a lot of money and have their worst trading days ahead of them! And don’t forget, human emotions are the very reason trading bots exist!
Back to robots, let’s say you found a reliable bot with a statement that shows the bot has been profitable overall and it’s at least six months long, does that mean there is nothing more for you to do? Nope.
Now you get to set up the bot and follow the instructions. Following exactly what the manual says is very important, even the minor setting if not put carefully, may result in catastrophic losses. It’s usually best to follow the recommended setting in the manual.
Now depending on how the bot works and what currency pairs it trades, you should lookout for the news. Of Course there are bots that have news filter meaning they won’t open any positions during important news, there are bots that don’t have this filter and you should turn off the bot manually.
The next step is fighting your demons!! GREED and FEAR. You will be tempted to change the volume, put it higher than you should, that never goes well! Reliable trading bots don’t usually have high returns. As little as 2 percent a month to maybe 5 to 8 percent at most. Anything above that is probably a scam or your account will break under the high drawdown sooner or later, so it’s not worth it!
The other demon is FEAR. Trading bots are also known for having a high drawdown, even at low risk settings. So 8 to 15 percent of drawdown is usually normal. But not everyone can take this well and a lot of people will constantly check their phones to see the results and it will affect their day to day life and the stress will have a significant impact on the quality of their lives.
Going back to the question: Should you try trading bots? It depends. If you’re looking for a way to make money from the financial markets without trading, and you are willing to put the effort in finding a reliable robot, and are willing to take the high risk of investing in these markets, then yes! Go for it.
But if you don't do well with the risk of losing money and you don’t have enough time and energy to find the right robot, then maybe it’s best for you to try other investing methods or passive income ideas.
If you did decide to try trading robots, maybe consider following the steps bellow:
1.Do your research and find some bots with acceptable reviews.
2.Only consider the bots that offer statement and history of their opened position for at least the last six months(Anything below that can’t really be trusted).
3.It’s best to try the bot on a demo account for at least a month before using it on a real account.
4.Do use the recommended setting at all times.
5.Risk only what you’re willing to lose.
6.Watch out for news if the bot doesn’t have a news filter.
7.Be patient.
I think that’s enough for now. I hope this was helpful for you guys and please do note that everything I said was to the best of my knowledge and I’m sure there is a lot more to talk about regarding trading bots automatic trading in general. So if you wish to share other important points about this matter, feel free to let us know in the comments.