Forex Robots (Expert Advisors) Tuesday March 10th, 2020 – Posted in: Arbitrage Software
“What is the best expert advisor on the market?” This is one of the most frequently asked questions that we get. It is also one that is very difficult to answer. It’s not unlike walking into a car dealership and asking one of the sales reps to point out the best car. The answer depends on a number of factors. One of them is the buyer’s motive. Is the buyer looking for a sports car, a family car, or a vehicle for business purposes? The same applies to robots. The trader’s motive is paramount and will inform the choice of robot. Depending on your trading goals, some robots will be better than others.
Another factor involves the trader’s location and regulatory environment. To continue with our automotive analogy, it’s all but impossible to purchase French automobiles in Canada. For some reason, they’re simply not available for distribution. By the same token, if you’re in the US, you might not be able to open certain accounts, as various account types are unavailable to American traders. If you’re a citizen of, say, Afghanistan, the choices imposed by your regulatory environment will also be very different.
Your financial position is important too, as is your trading horizon (that is, whether you’re interested in short-term trades only, or whether your outlook is more long-term).
The list goes on.
When clients ask us about the best expert advisor, we often request more information and context in order to provide a thoughtful answer to their question. Unfortunately, the clarification that we receive often leaves us even more confused. For example, the client might tell us that he wants to start small (e.g., with a deposit of $100) and therefore needs a robot that will give him a monthly profit of 100% or even 1,000%. If everything works out, the client will then bring an investor with some $5 million in trading capital.
This approach is less than ideal, and it makes it very difficult for us to recommend an optimal expert advisor. A trader with $100 to invest will require a robot that is very different from a trader with $5 million to invest. Traders should always be realistic about their goals, and they should approach the market with restrained optimism. A more realistic outlook will also help us come up with recommendations for the best robot at a given point in time.
If you have $100 to trade, you can let us know that you have a deposit of $100 and would like to see this amount grow as quickly as possible. We’ll then find an expert advisor that should help you achieve your stated goal. When your situation or investment profile changes, we can reassess your situation and recommend a robot that will be more suitable for your new situation.
If, on the other hand, you happen to have $5 million in trading capital right now, we will recommend another forex robot that is appropriate for this kind of capital and, potentially, for the more long-term outlook that usually accompanies very large deposits.
You need to know that sky-high monthly profits on the order of 300-400% are practically unrealistic. While you may be able to obtain such profits if you use a solid arbitrage trading strategy, this will only work in the short term. Remember that brokers monitor account performance, and any trading accounts that show suspiciously high profits on a regular basis will get flagged. Sooner or later, your trading will be suspended and your account will be shut down. If your broker is a regulated one, your initial deposit and your trading profits will be returned to you, with the understanding that you won’t be able to use that broker again – the broker will simply turn you away. If you’re working with an unregulated broker, in most cases, you will only get your deposit back; the profits will be withheld. If you’re in it for the long haul, you need to have a realistic outlook when it comes to profit expectations. This will also help you choose the right trading product for your needs.
If you are looking for a robot or software that will deliver monthly profits of 40-60% with small risk (i.e., almost 0%) and low drawdown, an arbitrage trading strategy is your best bet. When it comes to arbitrage, we typically recommend lock arbitrage. There are a number of reasons for that. As lock arbitrage emulates manual trading, it masks your arbitrage activity, leading the broker to believe that you’re trading manually and not engaging in arbitrage. Unlike standard arbitrage orders, lock trading orders remain open for longer periods of time. Also, they are opened before arbitrage situations appear; the only thing that happens during arbitrage situations is the closing of lock orders.
Lock arbitrage is a low-risk type of arbitrage (the risk is typically close to 0%), while monthly profits can range from 60% to 100%, and even higher. However, note that monthly returns of 100-150% will eventually prompt the broker to take a closer look at your trading. Even in this case, though, you’ll be in a better position: if your setup was done properly, with our help, and IP changers were used, it will be difficult for the broker to refuse to turn over your profits to you.
We are also often asked whether we recommend trading the news or arbitrage trading as the best trading strategy. This question is just as challenging to answer as the one about the best robots. These are two distinct styles of trading, and each one appeals to a different type of trader personality. Traders who are somewhat addicted to volume are drawn to arbitrage trading, as it lets them trade daily. At the same time, when it comes to profitability, arbitrage trading involves a high number of small profits. In other words, the trader is trying to capture a small profit on each trade. The drawback here is that an inordinate number of daily trades is likely to get the broker’s attention. A strategy such as trading the news will not be attractive for traders who want to trade often.
Trading the news, on the other hand, is for those who prefer to place large orders but are happy to do so infrequently. News traders don’t trade daily. A news trader might have no more than 5-10 trades per week. However, these trades will probably involve big lots. A news trader will trade a suitable news item with a large lot size and then remain idle, waiting for the next piece of news. A news trader does not need a lot of activity. In fact, we’ve noticed that experienced news traders filter even those triggers that we recommend for use, selecting only the triggers that they believe to be the most important ones. They then use these triggers with an outsized lot. Typically, fewer than 5 triggers are used after the filtering.
Essentially, when it comes to trading frequency and the nature of profits, trading the news is the opposite of arbitrage trading.
You need to determine which approach is best, given your personality and trading preferences. If you’re interested in trading the news, you have to realize that while a profit of 100% on a single trade is possible, you might have to wait a week or perhaps even a month for that trade. Ask yourself if that is acceptable to you.
Another question we frequently see is why we offer latency arbitrage when we recommend lock arbitrage. The answer is that many traders want to make money quickly, and it is easier to do so with latency arbitrage. This is because latency arbitrage involves fewer swap- and commission-related losses. This can actually work for traders who are interested in fast profits, as long as they understand that it is easier for brokers to flag latency arbitrage traders than lock arbitrage ones. Moreover, our VIP latency arbitrage software is designed to camouflage arbitrage activity and make it look like manual trading, and our software also allows users to hedge trades in the same account.
Nevertheless, latency arbitrage software offers traders less protection than lock arbitrage software. But latency arbitrage works for many traders. This kind of arbitrage does not require orders to be open for longer periods of time, and that is exactly what many arbitrage traders need. As with everything else, there are pros and cons.
Ultimately, your personal requirements will determine whether you want to use latency arbitrage, lock arbitrage, or whether trading the news is best. Equally, your personal requirements will determine the kind of robot that best meets your needs.
Sometimes traders approach us to ask whether it won’t make more sense for them to use an ordinary robot and make it transparent to their brokers that they are using arbitrage strategies. We don’t think that is a good idea. As we have said time and again, all trading strategies are legal. If a broker refuses to accommodate arbitrage strategies, it is most likely a B-book broker – a broker whose business model requires you to lose money in order for the broker to make money. This is not a broker you want to work with in the first place.
Alternatively, if you do want to work with that kind of broker, you should feel free to use any trading strategy that can enhance your trading performance. The broker’s job is to provide you with a trading platform. While the broker might ask you to take your business elsewhere if your strategy is not to the broker’s taste, it makes little sense to put up with unreasonable restrictions on your trading strategy. To put it bluntly, your trading strategy is no business of the broker.
If you don’t want to engage in arbitrage trading, we can certainly offer you ordinary expert advisors. However, you need to understand that no expert advisor can generate the kinds of profits that you can get from arbitrage trading – not unless you’re willing to take on a lot more risk. Even with scalping strategies, stop losses are placed farther away from prices than they are with arbitrage strategies, where we have a good idea as to where the market will move. The farther away the stop loss, the higher the risk. If, instead of a scalping strategy, you use some long-term strategy or intraday strategy, then your stop losses will be placed farther still.
Some traders use various money management strategies with averages in order to reduce drawdown rates. But these also increase risk. Traders using such strategies first set an average in testing mode before applying the average in real-life trading. The problem is that these tests are usually ineffective when you have to trade in the real world. For example, a money management strategy can generate an average of 3 losing trades during testing. The trader then uses that average to trade, but in real life the trader might face 4 or 5 consecutive losing trades. The market is inherently unpredictable.
The only way to predict the market – or at least to mitigate its unpredictable nature – is to use arbitrage trading or news trading strategies. These strategies allow us to obtain information in advance.
There is nothing wrong with working with the same broker for a long period of time. It is perfectly acceptable to stick to the same broker throughout and to use ordinary robots that accommodate such trading preferences, if that’s what you want. But you have to be aware of two things. One is that your risk level will be higher. The other is that even the use of an ordinary robot is no guarantee of hassle-free trading. Your broker might still flag your account. If you’re using a scalping strategy, the broker can increase your order execution time and your slippage to make your trading unprofitable. Other methods might also be used to negatively affect your profitability. Again, your risks will be higher.
Whatever you decide to do, the upshot is that before you commit yourself to trading, you have to determine your objectives. You need to figure out if your objectives will be better served by long-term or short-term performance. You should also decide whether you prefer to work with only one broker, or whether you’re willing to change brokers as needed – a more cumbersome strategy, perhaps, but one that offers higher profits and lower risk.
You should also be mindful of your geography. If you live in a country that is under sanctions or one with the kind of regulatory environment that currently exists in the US, you will be limited in your choice of brokers. In that case, it might make more sense for you to trade cryptocurrencies, or perhaps to use an ordinary expert advisor to trade forex. While an ordinary advisor might be underwhelming performance-wise, in a regulatory environment dominated by several brokers that take advantage of their oligopolistic position, an ordinary expert advisor will at least let you earn some money from trading.