Why you should take good care of your trading robot

In today's article, I am focusing on the importance of taking good care of an Expert Advisor (EA) that you use in your trading account to achieve sustainable profitability.

Victor Tomov | 02:47, 2019/05/31

Dear aspiring investors,

Let me be pretty clear and straight-forward with you from the very beginning. No matter how difficult it is to accept it, but there is a single truth about the so-called trading robots:

If you buy an EA and start using it on your trading account, you have to take care of it - the same way you take care of your shiny new car or any other tool that you plan to use for a long time.

This statement may sound quite controversial to you at first glance, especially when considering the original purpose of a trading robot, i.e. to fully automate your investment in financial markets by opening and closing trades on your account relieving you from the necessity to study the price indicators looking for new entry opportunities.

The decision to use such a tool is reasonable, just like the decision to buy a new car for satisfying your daily travel needs. After all, automation is the latest hype, and artificial intelligence gets into our lives quite fast. Algorithms are developed to facilitate the daunting routines of any activity. It is what the robots are good at - helping us achieve our goals while keeping our brains focused on what they are best - engineering, inventing, modelling, creating.

A car alone will not get you to your destination without your input as the driver. This same car will not last long if you ignore its early signals when something may get wrong not serving it properly. And a car is full of automation these days. No matter what tools you are using, you are the person in charge of the results. The "set it and forget it" mentality could cause troubles in the long run.

The usage of trading robots (e.g. MT4 EAs) is no different. But why? Aren't they built by experts who know how the financial markets work? Aren't they based on extensive backtesting for years before the release date? Yes, they are (or at least the high-quality ones) but so is your car, engineered and compiled in high-tech factories under strict regulatory safety standards.

But just like cars, the Expert Advisors are exposed to constantly changing conditions. And when it comes to finance and investment, change is the only constant variable in the equation. No matter how robust a trading robot is, it is based on a standard logic coded in its algorithm and applied consistently. Indeed, consistency is one of the best qualities of such automated trading tools immune to emotions. However, there are always moments when the price of an asset moves in an unpredictable direction causing fluctuations of different range and magnitude. In such situations, we talk about turbulence and nothing is immune to it, especially a robot that follows a predefined logic strictly. The high-quality robots will have carefully set volatility filters to avoid dangerous situations, but they may get caught up by misleading early trading signals. Errr, it's getting complicated, isn't it?

It's in our human nature to look for shortcuts. It's our brain that makes the simple solutions so tempting and attractive. It's normal for us to go for the low-hanging fruits in the complex world of financial investment. There is nothing wrong with that considering the wide range of technologies and services available. Hence, what we often underestimate and overlook is our maintenance and monitoring responsibility - the efforts we have to put into ensuring that the tools we are using (no matter how advanced and user-friendly they are) perform with stability and will serve us in the long term. This is especially true when using trading robots. If we are already doing so, it's good to ask ourselves the following questions:

  • Are we monitoring the robot's performance daily (by checking the results from time to time, even if only via an investor password for our trading account)?
  • Have we read the specifications of the robot and understood all the details about its logic and strategy before buying and starting to use it?
  • Are we stepping in when we notice a negative trend in performance?
  • Are we spending some time testing new settings to optimise the EA's performance?
  • Are we learning from observations of the robot's activity about the financial markets on which it trades? 

If we are considering to use trading robots on our accounts, the questions listed above apply, but we should start them with "are we going to".

If one or more of the answers are negative, then comes the next question:

"Why do we take such good care of our new car or keep up with the latest upgrades of our gadgets (which could be quite expensive, by the way) but don't bother with checking and maintaining the trading robot we bought to earn money for us?"

The answer could be quite simple - complacency is creeping in when we touch something we do not fully understand and it's much easier to either stop using it when we first notice an issue or wait passively with the hope that things will get better soon. Yes, they may well get better sooner or later, but what about the lost potential profit opportunities. And such opportunities exist in almost every market condition. If we see something goes not as expected, nothing stops us from taking things in our hands, learn new skills, test, optimise or in other words "get our hands dirty", and get back to the joyful things in life once all is settled.

The great thing about trading robots is that they require almost no manual intervention and if so - it's relatively rare if we are talking about a high-quality product. But still, it's quite vital for us to be ready to take actions when we face market turbulence. It's not about being scared or not using EAs; it's about taking care of them just like we do with other valuable things in our life. If we do it, they will serve us for a long time, and with trading robots, this means quite hefty profits compared to the flat close-to-zero passive income we generate from standard savings products. All this with almost no effort from our side!

Applying the magic of human creativity to an automated trading system could be rewarding. I have been doing so for a long time and invite you to read my case study where I present a possible scenario for maximising the profitability of TradeRobo EA - a German-engineered powerful MT4 EA delivered to you exclusively by Findilao. It could be interesting for you if you like the idea of automated trading with a human touch. Moreover, I invite you to join my weekly webinar on the topic.

If you still prefer leaving a trading robot to run fully autonomously on your account, TradeRobo EA is also a good fit having a high-end risk management algorithm.

Warning:

Disclaimer: This article presents the personal opinion of the author based on individual experience and past results. None of its content shall be considered investment advice. Past performance does not indicate future results. It is your sole responsibility to decide whether to follow any presented techniques or approaches and neither the author nor Findilao Ltd can be held liable for an outcome from your actions.

Risk Warning: Trading Foreign Exchange and Contracts for Difference (CFDs) is highly speculative and may not be suitable for all investors. The leverage created by trading on margin can work against you as well as for you. Only invest with money you can afford to lose and ensure that you fully understand the risks involved. You should be aware that your investment may go down as well as up and you may not get back the full amount invested. Seek independent advice if necessary, before buying a subscription to use our services.

Victor Tomov has more than six years of extensive hands-on experience in the financial industry gained in different management roles. Passionate about marketing ethics and confident in the success of any customer-driven organisation, Victor leads Findilao's business operations since the company's establishment in early 2018 offering diverse solutions for sustainable investment growth that help investors make wise decisions and monetise financial expertise. He has a Masters in Corporate Marketing from the University of Economics in Varna, Bulgaria. Victor's strong analytical skills proved to be instrumental in the development of his views on trading.

Victor Tomov has more than six years of extensive hands-on experience in the financial industry gained in different management roles. Passionate about marketing ethics and confident in the success of any customer-driven organisation, Victor leads Findilao's business operations since the company's establishment in early 2018 offering diverse solutions for sustainable investment growth that help investors make wise decisions and monetise financial expertise. He has a Masters in Corporate Marketing from the University of Economics in Varna, Bulgaria. Victor's strong analytical skills proved to be instrumental in the development of his views on trading.