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Forex Trading Robots

For those that have wondered about trading robots, what they do and how they work, this article was made for you!

What is a Trading Robot

We often think of robots as metal clunky objects that kind of come to life and do cool stuff, have flashing lights and make weird noises! But that’s not that case for Forex trading robots.

A trading robot is really just a set of code that is on a computer and runs on a trading platform, monitoring the market for trades, based on the conditions written in the code.

The types of conditions a trading robot might be looking for vary greatly depending on the algorithm and intentions of the trader running the trading robot.

How is a trading robot made?

A trading robot is made by writing code in a code editor such as MetaEditor (4 or 5 depending on the platform). There’s a tutorial page here for more information.

Trading code for MetaTrader 5 platforms is written in MQL5 language. There are many languages a trading algorithm might be written in, including Python, MQL4 and C++. 

Once code is written and compiled, it can be found in the trading platform in the files. For MetaTrader, they are saved to the Expert Advisors folder.

By dragging and dropping the file from the navigator onto a chart, the trading robot will show a pop up box with parameters to check and then by clicking ok, the trading robot will be ready to activate. 

There is just one more step in getting it working though…

The button at the top of the trading platform, MetaTrader 5, showing Allow Automated Trading. If there’s a red area it is not active, but with a green play button showing, the trading algorithm is ready to do its trading robot thing!

Once done, the trading robot monitors the Forex market and does what the code tells it to. Place trades, adjust stop losses and take profits & close positions. Basically anything a manual trader might do, a trading robot can do with the utmost diligence.  

The best part is.. Trading Robots don’t get emotional or make decisions. They are basically a free employee that works 24 hours a day.

What can a trading robot do?

Trading robots do whatever it is that they are told. It might be placing orders, monitoring news websites, checking for market conditions and market changes, looking for trends.. You name it!

One of the best parts about trading robots, when compared to manual trading is the backtesting capabilities.

Rather than manually checking to see if you would or would not have gotten into a trade and then writing down the conditions, profit and loss etc. you can simply run a test at the press of a button. Using the Strategy Tester, the trading robot can backtest (using trade history) to see if the algorithm would have been profitable over the timeframe you selected. That’s hours of potential checking, over in sometimes minutes. 

That testing means that you can work out if it’s worth trading the algorithm or not, make adjustments and use data science to determine what changes could be made to improve the trading robot.

Data science can be a scary word to some people. It really just means seeing patterns and adapting changes to those patterns. For example, if your trading robot always lost trades on a Friday, you can tell your robot to stop trading on a Friday. Re-test the results and if that improved the results by a reasonable amount, that’s awesome! You just data science the Sh!t out of that one!


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