Forex Robots and Copy Trading

The world of forex trading is evolving fast, with more traders relying on automated systems like forex robots and social trading platforms like copy trading. Both strategies have their unique advantages. But what if you could combine the two for a more powerful trading strategy? This article explores how you can integrate forex robots with copy trading and whether it’s worth the effort.

What is Copy Trading?
Before diving into how these two systems can work together, let’s first define what copy trading is. Copy trading allows you to replicate the trades of more experienced or successful traders in real-time. Through a platform, you can link your account to a professional trader’s account. When they make a trade, your account automatically makes the same trade.
Copy trading is popular among beginners who may not have the time or expertise to develop their own trading strategies. By copying a proven trader, they can tap into the trader’s expertise without having to make decisions on their own.

What Are Forex Robots?
On the other hand, forex robots, or Expert Advisors (EAs), are software programs designed to automatically execute trades based on preset rules and algorithms. Unlike copy trading, where you are relying on another trader’s judgment, forex robots rely on data, technical indicators, and programmed strategies to make trades.
Forex robots take the emotion out of trading. They stick to their rules and trade whenever the right conditions are met, 24 hours a day. However, robots are limited by their programming. They can’t adapt to market sentiment or unexpected news events the way a human trader can. However, advanced robots like forexduo doesn’t have such limitations.
Differences Between Copy Trading and Forex Robots
At their core, copy trading and forex robots aim to automate the trading process, but they do so in very different ways.

Human vs. Machine: Copy trading relies on human decision-making. The trader you’re copying may adjust their strategy based on news events, sentiment, or market conditions. Forex robots, however, follow a strict set of rules based on data and algorithms. They can’t “think” outside of their programming.
Adaptability: A human trader can change their strategy if the market suddenly shifts. A forex robot will only trade according to its pre-set rules, which may not work in all market conditions.

Can You Combine Forex Robots with Copy Trading?
The idea of combining these two strategies may sound complex, but it can be a powerful tool if done correctly. There are a few ways to integrate forex robots with copy trading:

Copy a human trader and use a forex robot for additional trades: One way to combine the two is by copying a successful human trader for the majority of your account, while allowing your forex robot to trade with a smaller portion. This way, you’re benefiting from the human trader’s experience while also taking advantage of the automated strategies offered by your robot.
Run both systems simultaneously: Another option is to run your forex robot and copy trading account side by side. This can provide some diversification, as the robot’s strategy might differ from the trader you’re copying. For example, your robot could focus on short-term trades while the human trader focuses on long-term trades.

Benefits of Combining Both Strategies
There are several benefits to combining forex robots and copy trading.

Diversification: By using both methods, you’re not putting all your eggs in one basket. If the human trader you’re copying hits a losing streak, your forex robot might still be profitable, or vice versa. This diversification can help you spread out risk and potentially increase your chances of success.
Reduced Risk: Forex robots and copy trading have different strengths and weaknesses. Forex robots can make quick trades based on data, while human traders might make more thoughtful, long-term decisions. Using both together reduces the chance that your entire strategy will fail if one method underperforms.
Maximized Opportunities: By running both systems, you’re capturing both short-term and long-term trading opportunities. A forex robot can make fast trades during volatile periods, while a human trader might stay in the trade for longer periods, capturing bigger market moves.

Risks of Combining Forex Robots and Copy Trading
While combining the two methods can provide some benefits, it’s not without its risks.

Overtrading: One of the biggest risks is overtrading. If both your forex robot and copied trader are active, your account could end up with too many open trades. This can increase your transaction costs and the overall risk to your account.
Conflicting Strategies: Another risk is conflicting strategies. If your robot is focused on scalping (short-term trades), and your copied trader is using a long-term strategy, they could end up conflicting with each other. This can cause confusion in your account and lead to unnecessary losses.
Increased Costs: Running both systems could also increase costs. You may be paying for the forex robot’s software or VPS, as well as any fees associated with the copy trading platform or the trader’s performance. These costs can add up quickly, cutting into your profits.

How to Make It Work
To successfully combine forex robots and copy trading, you’ll need a clear plan.

Choose Complementary Strategies: Make sure that the robot and the trader you’re copying aren’t working against each other. For example, you might want to use a robot focused on short-term trades while the human trader takes long-term positions. This way, you’re capturing different types of opportunities without overlapping.
Set Trade Limits: Avoid overtrading by setting limits on the number of trades your forex robot can open, or limit the number of trades your copied trader can make. This helps to reduce risk and control your exposure.
Monitor Performance Regularly: Even though both systems are automated, you should still monitor their performance regularly. Check if the strategies are working well together, and if not, adjust accordingly.

Conclusion: Combining forex robots with copy trading can offer a powerful way to automate your trades and reduce risk. By using both strategies, you can diversify your portfolio, capture more opportunities, and reduce reliance on a single approach. However, it’s important to carefully manage the risks, especially overtrading and conflicting strategies. If done correctly, the combination of automation and human intuition can lead to a more profitable trading experience.

Suresh KP is the Founder of Myinvestmentideas. He is NISM Certified – Investment Adviser and NISM Certified – Research Analyst. He has been analyzing financial markets in the last 20 years.He can be reached at suresh@myinvestmentideas.com Latest posts by Suresh KP (see all)