Advantages Of Using A Robot
1. EAs can trade for you 24 hrs per day without food or sleep.
Human traders have severe restraints on their time -- they have to eat and sleep and go to the restroom, not to mention other responsibilities such as work, family, and friends. It is next to impossible for a human to trade the entire 24 hour currency market. He is often forced to trade during certain times of his waking day, but in doing so he is missing out on both entry and exit opportunities offered by other time sessions. The EA does not sleep and rest and can work the entire 24 hour currency shift searching for trading opportunities.
2. EAs free up your time to do other stuff instead of looking at the computer screen all day.
When the EA trades, you can go have fun, work on other things, spend time with friends and family. You are no longer a prisoner to the computer screen and charts. If you want to be more involved, you can spend your time researching for (and coding) new and improved ideas for your EA, and then backtesting and optimizing these ideas. This would be using your time smartly in R&D (Research and Development), instead of wasting it on planning, executing and monitoring of singular trades.
3. EAs operates on a set of rules without greed, fear, ego or bias.
Fear and greed are the biggest obstacles to successful trading. Fear becomes an irrational force when it prevents the trader from taking necessary trades or hesitating too long, particularly after having suffered a losing trade, or it prevents a trader from closing out a bad trade with a loss. Greed, its emotional opposite, can cause traders to make random trades, or hold on to positions longer than their trading system dictates. Humans are also plagued with ego and bias, seeing what they want to see from the chart and indicators, looking for confirmation for their hunches, and unable to see things critically and objectively. So long as there is real money at stake it is very difficult for a human to overcome these negative emotions and biases. EAs help combat emotions by getting you in and out of the market based on historically tested strategies.
4. Most EAs are developed with parameters that you can be backtested and optimized on quantifiable data.
The ability to backtest on quantifiable data is an epistemological paradigm shift in favor of the EA. Prior to that human traders either did not backtest their trading ideas, which is sheer idiocy, or they attempted to do so in a very awkward fashion. Often they had to resort to the very crude and time consuming task of printing out reams of historical charts and "eyeballing" the behavior of the rules related to their indicator(s), making notes of the gains and losses in a ledger. Due to the time consuming nature of such an activity, they often backtested only on higher time frame charts and preferred not to go back too far in time. Each change in the rule or paramater of the indicator would force a repeat process, making it exceedingly difficult to optimize. With the built-in backtesting and optimization engines, EAs conduct these necessary and formerly incredible tasks in minutes. To assist with back testing, metatrader servers store a huge quantity of downloadable AND free historical data, in intraday format from 1999 till present, and daily or greater from 1971 till present.
5. EAs are able to identify and react to opportunities faster.
You do not need to worry about missing a trading opportunity because you are not staring at the right chart closely enough, or wasting precious seconds entering an order manually while the market moves away from you. The EA uses the speed of the computer to monitor the markets, seek and identify trading opportunities based on coded rules, and execute based on these rules in fractions of seconds.
1. An EA needs to run on a decent computer at home with reliable internet, or on an affordable Virtual Private Server (VPS), 24 hrs a day, in order for it to behave properly and take all the trades it was designed to take. The good news is that most internet connections are up 99% of the time, and there are plenty of low-priced and reliable VPS providers out there.
2. Manual intervention of the EA is not advisable: usually the creator of the EA has a better understanding of its inner workings and has hopefully done all the appriopriate back testing and optimizations. Traders who want to fiddle with exiting trades according to their own whims or rules invariably end up degrading the EA's full potential.
3. Most EAs are mathematically and technically based, and work best on trending markets, so they are vulnerable when the markets become sideways. When the markets enter into low pip range, sideways activity, EAs tends to get chopped up.
4. It is very difficult to get an EA to read and decipher fundamental data, such as economic and political events. Hopefully the result of the event is impeded in the price action, and then the EA can read it. But a sudden extreme event that quickly reverses the market direction can cause an EA to get stopped out, and/or enter too late in the new direction.
It is sad fact that 95% of EAs end up failing, either losing a bunch or just barely staying alive. Interestingly enough, about 95% of manual traders fail as well. The EA has a number of potential edge factors over a manual trader, without all the emotional and physical limitations of a human, and yet in the end, the markets are so exceedingly difficult most EAs cannot win against it, the choice is yours.