How Trading Bots Hinder Forex Trading Skill Development

A trading robot/bot is a software or app developed to carry out trading activities on behalf of a trader.

It is used for market data analysis; to spot potential opportunities, and execute trades according to its pre-set/programmed instructions.

All without a trader’s intervention.

In forex, they are referred to as Expert Advisors (EAs).

Let’s discuss the drawbacks of solely depending on bots for trading & how it affects skill development and growth.

How Expert Advisors can affect your trading skill

1. Less manual trading knowledge

If you always automate your trades, you would miss the opportunity of actively participating in the market.

This lack of interaction may make you naive and prevent you from comprehending market behaviour.

2. Poor understanding of technical/fundamental analysis

When you depend on a software to conduct market data analysis, of course your forex foundation would be compromised.

It may be difficult for you to identify the intricacies of fundamental and technical analysis such as economic Indicators, support and resistance, chart patterns or trend lines.

3. It makes you less attuned to the psychological aspect of trading

The market is not always mathematical because it involves human beings. Therefore, regulated emotions or intuition is needed in trading.

Consistently utilising bots limits you from developing a reliable intuition, from becoming emotionally alert.

4. It limits adaptability and makes you become rigid

Trading machines only work based on pre-programmed sets of rules and do not embrace the dynamic nature of forex.

A trader cannot change or flow with the market and thereby miss “unexpected” profitable opportunities.

But are EAs completely bad? No they aren’t. They also have advantages.

The potential benefits are:

(a) Speed and efficiency. A robot can analyse data and execute trades faster than a human. It takes only seconds.

(b) They don’t get stressed, tired or frustrated. Thus, can trade 24/7 with zero emotions.

(c) And lastly, it can help you backtest and understand your strategy better.

Conclusion

Although EAs are not totally disadvantageous, it is unhealthy to primarily rely on them. They can make you become a dependent and unequipped forex trader.