“There are only two emotions on Wall Street – fear and greed” – William Lefevre
Trading robots were created in order to eliminate the psychological element of trading. They analyze the market and open the position automatically without any help from human beings. Basically, it is a computer programme making its own decisions based on collected data such as the volume of the market, trend direction and trend power, graph patterns, fake pumps and dumps etc.
Although, trading robots should not be regarded as a “holy grail”. It is because the market is way more unpredictable than most people may assume. Robots are seeking the rationalization of the price change, while the price is trying to be as tricky as possible. So most professionals use such robots as an auxiliary tool for comprehensive analysis of the market but not as a main decisive factor.
It is worth mentioning that robots are quite adjustable. That means every trader may adapt the programme and tailor it to his own needs. For example, every trader determines the lower acceptable loss (the price where the loss is not so considerable) after crossing which the position should be automatically closed. This is due to the volatility of markets: prices are going up and down, sometimes it makes rapid movements but then returns to the starting position. To handle all these risks traders use the stop-loss tool. And of course, robots allow traders to settle exclusive rules regulating risk management.
All the robots are written in MetaQuotes Language (MQL) which is a programming language used specifically to create automated trading robots and market indicators. That gives a great advantage for users because it means that every single person may not only buy robots but create them as well.
Why do robots mistake? The answer is that usually they do not really predict, they rather interpret the chaos occurring in the market. So they do not outstrip the market they rather leg behind it. Robots try to find bonds between various factors and use algorithms to make a decision. But no algorithm (at least now) can predict that Elon Musk, for example, will decide to post a tweet #bitcoin and the price of BTC will rocket to the historical maximum just in seconds. Actually, no one is capable of doing that except for Elon himself)