In theory, bots automate trading, eliminate errors associated with the human factor, and take earnings to a new level. At least that's what they say in the ads for these products. But in reality, this is not always the case. Bots operate within narrow patterns, unable to quickly adapt to market changes and new  trading strategies.

It should also be noted that trading bots are divided into several types:

• trading advisors - programs that suggest entry and exit points from the market;
• free bots - created by private traders in order to try out new strategies or are outdated versions of paid applications;
• paid bots are developed by experienced programmers in tandem with traders and can potentially really manage assets automatically.

Summarizing the above, we can draw the following conclusion: trading robots are mathematical algorithms with a graphical interface that are used to automate  official trading  and are aimed at a wide range of novice users who are not yet well versed in the features of the market. Learn more about crypto trading bot for Kraken. 

Pros and cons of trading bots

A trader with 2-3 years of experience makes a manual comprehensive market analysis in 25-30 minutes. It will take a novice trader several days to do this, provided that he does not get distracted. Naturally, many do not like this prospect.

Bots solve this problem because they take care of all the mathematical and statistical research. Saving time is the main and main plus of  online trading . The second advantage follows from this fact - orders are opened and closed without the direct participation of the trader.

The third and objectively last plus is that the bot trades 24/7. Accordingly, he conducts more transactions than a person can physically do. It is assumed that in this format, the trader's income will be higher.

As for the minuses of  forex now , the main problem is the lack of control over the movement of assets. Robots open positions based on trading signals, and not always, these signals are correct, which increases the likelihood of losing funds.

The second problem is compensatory algorithms. Most bots use the Martingale strategy. It involves the creation of a grid of orders, in which each subsequent transaction is larger than the previous one. From a mathematical point of view, sooner or later, this will compensate for all losses and make a profit. But in practice, the money in the account may run out before the strategy is successful.

The third significant drawback is the narrow focus of bots. Programs used on  trading platforms are usually  designed to work on specific timeframes and with specific currency pairs. This means that for complex full-fledged trading, you need to install several bots that confirm that  online earnings  are not a scam. Accordingly, when buying paid software, this significantly increases your costs.

Why trading with bots is unprofitable in practice

To understand this topic, you need to understand how the market works and how traders make money. In a general sense, the income from a trading operation is the difference between the purchase and sale price of an asset, minus the broker's margin.

But in fact, not everything is so simple. Hundreds of thousands of traders participate in trading. These include private investors as well as large enterprises, trust funds and market data providers. All these categories of merchants are interested in making money.

But, since the currency has a limited issue, in order for one person to earn, the other must lose capital. This suggests that for profitable trading, you need to be cunning and observant. Not all seemingly successful transactions turn out to be profitable in practice.

This is due to both technical and fundamental factors. Let's consider each of them in detail in order to clearly understand why you should not mess with bots.

Technical risks of working with bots

The main problem of all trading robots is noise. This term implies erroneous signals that the program receives as a result of market analysis. Consider an example.

As a result of the analysis of 10 previous five-minute timeframes, the program came to the conclusion that the quotes for the pair are making a predictable surge in volatility within the directional daily trend.

On the one hand, the analysis is done correctly and such surges do occur. But on the other hand, the difference in the price of buying and selling is so insignificant that the transaction is not profitable.

Technical analysis  works within a limited time frame. Programs can only accurately predict short-term trends. This means that the trader is forced to use scalping, which limits his potential earnings.

It should also be noted that, relying on programs, traders often do not want to delve into the intricacies of technical analysis. As a result, they do not acquire important skills, without which successful trading should be forgotten.

It can be noted that from a technical point of view, bots are not a  scam . But the described practical points demonstrate why this trading option is not the best.

Fundamental risks of working with bots

Trading training  necessarily includes a section on the analysis of global trend drivers. We are talking about important news of an economic nature, financial reports of states and big business. All these developments have a strong impact on  online trading .

You can try to predict them based on expert opinions and objective market data. But this is done exclusively by hand. The machine is unable to anticipate the spontaneous fluctuations and deviations that are characteristic  of trading markets .

Let's take a simple  stock example . In the technical analysis performed by robots, it is clear that there is an increasing, bullish, trend. Based on historical data, the bot opens buy positions in order to sell assets before the market reversal and lock in profits.

In reality, the head of the company whose shares you are trading makes a loud statement that weakens his position in the market. Investors create a panic wave of sell-offs, resulting in a sharp rebound in prices. The bot is driving you to minus.

If you filter each  trading signal  manually, the trader will be insured against such unpleasant moments. In addition, he will be able to apply trading strategies based on moving against the trend. This is a risky financial instrument, but it can bring more profit than standard methods.

But if you are thinking  about how to become an extra-class trader  , you must definitely master the work with fundamental factors in manual mode and not trust the trading process to robots that are simply not able to work with this information.

Why you should abandon bots and trust your intuition

Most  beginner trading guides  contain information about how to follow the chosen strategy unquestioningly and not deviate from clear rules. On the one hand, this is true. But it is important to understand that in this way the authors of the textbooks try to protect traders from spontaneous decision making.

Do not confuse inexperience with intuition. The second comes with experience and it is simply impossible to make really large profitable transactions without this factor. In practice, there are often cases when  the dollar exchange rate,  according to all forecasts, should fall, but in the end it grows.

The financial market is not pure mathematics, it has a strong psychological influence. The actions of large traders cause waves of volatility, stuffing liquidity providers often mislead other traders, as a result, some lose money, others earn.

The best trading  is the one that is engaged in by a person, since this activity is akin to gambling. You need to feel what is happening and make deliberate, clear and balanced decisions.

The machine is not capable of this for objective reasons. Therefore, trading with bots is extremely unprofitable, involves many risks and in most cases leads to financial losses. Therefore, there are a lot of reviews on the network that bots are  scam .