Nowadays, automated programs for trading are gaining popularity, due to their simplicity and reliability. There are so many different titles and rules to follow, that it can seem too dangerous for newbies. But you can deal with them with the help of an automated platform It will save your time and money. But you should remember about the drawbacks anyway.

There are three groups of programs:

  • Multicurrency — works on the terminal with any pair. Precious metals and commodities are a less effective tool, because in this case, fundamental factors influence the price movement.
  • Indicator — determines oversold levels, reversal zones and trend movements. They are based on technical tools, which depend on the bot. 
  • Scalpers — expert advisors work only on the small TF, it is possible to complete up to ten operations per day. 

What to choose? It depends on personal preferences and goals. It also depends on the personal trading style of a speculator.

Disadvantages of automation in trading

Now let’s review the obvious disadvantages of automated trading:

  • Optimization of the trading system. At least one strategy will be used, if there are more, more time will have to be devoted to it. Even though it is an automated process, you will still need a trader’s presence, especially when starting to use robots.
  • Science-intensive process. This point concerns those who aim to run a robot on their own in the future. They will have to master the programming language, and most likely, learn the robot constructor at the same time.
  • Errors in the algorithm. Yes, this is one of the most basic disadvantages that any investor may encounter. It is worth understanding that a small error can negatively affect the size of the deposit, especially if the trader does not notice the problem immediately. 
  • Lack of reaction to market situation changes. The software does not know when to act and when to miss a signal. Therefore, it is important to have a trader, who can deactivate the program, if necessary. 
  • Loss of relevance. Since the market is moving steadily, the system can simply stop being effective. So, you need to tune the robot to new conditions or find a replacement. 
  • Price. Remember that a good robot will cost a pretty penny. Moreover, you need to calculate whether buying an Expert Advisor will be profitable, considering the available budget. In fact, quite often the price of the robot is higher than the deposit size of a novice trader.
  • Limitations of auto-trading. Not all brokerage companies allow the use of robots. Therefore, if a trader considers only this trading format, it is necessary to search for the firm that allows auto trading.
  • Loss of professional skills. Of course, automated trading unties traders’ hands, but not everybody uses their free time for studying trading courses or practicing skills. 

In general, the automation of the trading process has its place in the market, but here it is important to carefully analyze all the advantages and disadvantages of the approach. One should not forget about the large number of scammers who offer supposedly decent tools, but in fact, the trader pays for an inefficient bot. So, do not forget about the existing rules of program selection. Moreover, the situation should be considered. Experts’ opinions regarding auto-trading are divided, so the choice is up to the trader.

About the author

Kyrie Mattos