Technology has made it easier for us to have access to derivatives trading. Now technology is further simplifying the derivatives trading process by making it easy for us to trade without committing so much efforts. This we can do through the help of robots. Binomo is one of the brokers that allows you to trade with robots.
Binary options involves speculating or betting on the potential directions of prices of assets listed in the financial markets. In other words, when you trade binary options, you are betting on the direction or trajectory that the price of a financial instrument will move after a period of time.
If you speculate that the price will go up after a period of time, you for a BUY or CALL trade. On the other hand, if you believe that the price will fall, go for a SELL or PUT trade.
Binary options can be very rewarding as much as it can be risky. We have countless cases of people losing the entirety of their trading capital to the markets. In fact different statistics claim that between 60% to 75% (or more) of traders lose money consistently.
Becoming a profitable trader takes a considerable amount of time. Also, you have to commit resources, consistency and diligence to trading. This learning curve could take months or even years in some cases. This translates to the fact that you will have to wait for that long to start making money. This may be discouraging.
However, you necessarily don’t have to wait that long to become profitable. With advances in technology, software can now trade for you, without the need for your involvement.
Robotic trading essentially involves the use of softwares to make trading decisions instead of humans. Ideally, a trader looking to make profits will conduct his/her analysis by him/herself. This includes monitoring the charts (technical analysis) and/or checking the news (fundamental analysis) to decide potential market moves. However, this can be burdensome.
As a result, softwares called algos, expert advisors or simply trading robots were developed and trading strategies built into them.
Limitations of Human Traders
Trading robots came about due to the severe limitations of human trading. There are so much issues attached to a person trading him/herself. Such include:
Emotions are one of the most common causes of losses and failure in the markets. Humans are driven by emotions, and those emotions drive us to do things – either positive or otherwise.
There are a number of emotions that are attached to trading; most of these emotions are quite harmful:
- Greed: One of the emotions traders feel when trading is greed. And this has comes up multiple times. For instance, when the trader is in a winning trade, because of greed the trader will refuse to close the trade, expecting that it will yield more returns. Usually the market reverses and the trader then ends up with a loss.
Greed is also what pushes traders to trade large positions, making them to ignore basic money management rules.
- Fear: Fear is also another negative emotions traders confront that makes them take illogical steps in the markets. For instance, when a trader is driven by fear, the trader will fail to take up good trading opportunities when they present themselves.
Then it happens that a trader is in a profitable trade which shows clear signs of even yielding more returns, but the trader closes the trade because of fear. It is also fear that makes traders close losing trades too early; some of these trades may still reverse.
- Hope: Finally, one emotion connected to trading that may ruin a trader is hope. Hope is what makes a trader to keep losing trades even when it was evident that the market will not reverse any longer.
Dealing with these emotions is difficult and this is what leads to the failure of many traders.
- Limited Ability
There is just so much a human trader can do. For instance, the human trader cannot check on multiple markets at the same time.
Also, no one can stay all the time trading. In fact, it is not even healthy – both for the body and for trading. As such, there is need for external help and the robot comes in here.
All humans are prone to mistakes. And traders do make mistakes in trading as well. However, we all know that I’m trading, hard-earned money is on the line. As such, these mistakes can be quite costly.
Benefits of Trading with Robots
As you will agree, human trading is very much limited. As such, robots have come in to fill that gap. Here, we outline the benefits of using robots and expert advisors to trade:
- Absence of Emotions
Robots do not work with emotions. There is no greed, no fear, no hope. They simply work based on the codes and programs imputed by their developers. As such, you can expect them to trade as you have designed them to.
- Unlimited Ability
By far one of the biggest advantages you get when you use robots is that their power to carry out tasks is simply unlimited.
There are seemingly endless financial assets and instruments listed on financial markets around the world. For instance, there are much more than 2,000 stocks listed on stock exchanges alone. There are countless cryptocurrencies. Thus, there is only so much markets a good trader can cover. But robots? They have the ability to search for patterns in as many markets as they can get.
They then make trades in those markets depending on the instructions they are operating upon.
- Can Work to Precision
Once your robot has been programmed in a certain manner, you can be rest assured that it will work according to specifications. This removes al
Downsides of Trading with Robots
Just like with every other thing, automated or robotic trading also has a number of limitations. We discuss some of these below:
- Robots are not smart enough
We should remember that these robots, no matter how accurate or correct they may be, they are mere computer programs that were developed by certain persons. They simply are limited to the programs and instructions written into them.
They cannot perform beyond the programmer’s instructions. As such, if certain unfamiliar market situation arises, these robots are not smart enough to adapt. This can lead to considerable losses.
However, we have to note that increasingly this is not the case anymore. We now robots that are quite smart and in fact, there are robots that learn. This is due to the concept known as machine learning.
- Technology and Power
For most robots, you have to power your computer for them to function. So, as such, if you want them to make money, the computer in which they run must always be available and up. This is not always possible. You may not always have access to power supply.
Even at that, it does not take long for the computer or PC to develop faults.
As such, what happens is that during the times that the robot is not working, you lose significant money making opportunities from the market.
However, we should also note that with advances in technology, there are now solutions to this. One of them is known as the VPS – Virtual Private Server. With this, the robot can run in the background on your computer even if the computer is not powered.
Binomo is a global binary options broker providing services to traders in over 130 countries.
Unlike many other binary options brokers, Binomo allows traders to trade with robots on its platform.
Factors to Consider When Selecting a Robot for Binomo
Building a robot from scratch is tedious. And it is only for you if you have technical and programming skills. As such, most of the times, you have to purchase the robot from providers. However, just like with every trading service, not all robots are worth using. Some are in fact scams.
The most important thing is for you to check the track record and reviews of whatever trading robot you choose to go for.
The robot you choose should be one that has some track record already. It should have a number of users who attest to its credibility and profitability.
Robotic trading is a concept developed to make our trading experience much better. If you properly make use of them, trading robots can help you achieve profitable trading. Also, we advise that you apply the robot to a reliable trading platform. One such platform that we recommend is Binomo.