Why Public Trading Robots Don’t Work – The Truth About Expert Advisor Bots

When you hear the phrase “trading robot”, what do you think about? Probably about a rectangular or square machine that sells various goods.
But in fact, this phrase is a common name for a program for trading stocks on stock exchanges in automatic mode. Unknowing people immediately have an idea in their heads to buy this robot and earn money without doing anything. Unfortunately, this is not possible, and now we will understand why.

Main types of trading robots

All programs are divided by type of activity and profitability. In the first case, these are automatic and semi-automatic options. What is their difference is clear from the name. Automatic do everything – from finding deals to closing – on their own for a person. Semi-automatic act as an assistant – they analyze, offer options and make recommendations. By profitability, trading robots are divided into low-frequency, medium-frequency and high-frequency ones. The difference between them lies in the number of trades over a period of time, profitability and risk. For low-frequency, the normal indicator is ten transactions per month with a yield of no more than fifty percent per year. For medium-frequency ones, there are already several dozen a day, and the yield varies from fifty-one to two hundred percent. We need to talk about high-frequency trading robots in more detail, because they are so unique and special that a separate investment direction was created for them – high-frequency trading or HFT.
hft trading allows you to make hundreds and thousands of transactions during the day [/ caption] The bottom line is that such programs are able to conclude tens of thousands of transactions per day. The profitability of each individual transaction will be extremely small, often less than one tenth of a percent. But on a straight line, such robots can bring huge income, and their profitability can be calculated in thousands of percent per annum.

An interesting fact is that semi-automatic high-frequency trading robots do not exist, since a person is not able to process all the information coming from them.

I think if you are familiar with investing, you have already understood about the risks of each type. At low frequencies, they will be minimal. In the mid-range, respectively, the average. And the high frequencies are huge. Here is a brief explanatory tablet, for greater clarity:

Important! The table shows approximate values ​​only for correctly configured and working trading robots without taking into account unique options. For example, a medium-frequency trading robot may have a return of more than 200%, but most fit into this framework. And many high-frequency ones often have negative returns, but only because they did not initially work in the right direction.

How the trading bot works

For greater clarity, hereinafter the trading robot will be called not a program, but an algorithm. This is important, since at the present time they are almost never written from scratch, but created on the basis of existing solutions. Therefore, we will not analyze a specific program, but the principle of operation itself. So, the algorithm of the trading robot operates according to a clearly written trading strategy – the rules for opening, maintaining and closing transactions are set. Thanks to this, the human factor and emotions are completely excluded. True, one critical minus follows from this, but more on that later. It is very easy to define a trading robot – it makes a huge number of transactions in a minimum period of time. Let’s take the data from the “Best Private Investor” contest for the fall of 2021. In second place we see a contestant under the nickname “Flomaster” with 222 transactions, but in the first place “perfection” with 10491 transactions.
The best private investor [/ caption] Naturally, such an amount is unattainable for a person – there is simply not enough time. Moreover, as we can see, the robot provided a yield of 869.40%. Just an incredible result, considering that many investors are hoping for at least 20% per annum. But the algorithm was able in just 3 months. The third, fifth, sixth and tenth places are also occupied by trading robots. Their profitability is lower, but still huge. In addition, it is worth remembering that all this happens automatically, without human intervention. Is this really the perfect way to make money? Not really, let’s look at the 8050 place in the same ranking. There are 7784 deals, but the yield went negative. Another example is 9105 with 2465 trades and negative returns.

It can be assumed that these are just assumptions – maybe the person himself decided to close some transactions, or incorrectly configured the algorithm. Such an opinion has the right to life, only the lower the profitability, the more failed trading robots will be in the rating. What is the difference between algorithms in the first places and in the last? Most often in public. Trading robots do not work – the opinion of a practicing trader, the whole truth as it is: https://youtu.be/bdVa9Hj4fd8

Reasons Why Public Trading Robots Will Never Make You a Millionaire

At this point, we will not touch on offers from large companies and banks (Sberbank, Alfa-Bank, and so on). Most likely, with the help of their trading robots, you can really earn money, but you can open a regular deposit with the same profitability. But various high-frequency Forex trading robots are another matter.

What’s good in theory is bad in practice.

It’s great when you were offered to buy a trading bot with a 1000% return. It’s great when you have proven its performance on a test account. Impossible when with 1000 thousand rubles he made you millions. Why is it impossible? Everything is quite simple and prosaic. When the creators come up with their own trading robots, they do not have the opportunity to test them in practice until the launch itself. That is, in theory, the shares of a company will go down, the algorithm will see this and buy, and then they will go up, and it will sell them. But in practice, will stocks really go up? What if they continue to decline? The robot cannot act outside the program code. Consequently, he cannot navigate in stressful situations. And this means that sooner or later he will lose everything. The solution to the problem exists – private bots customized for themselves.

Is there enough money?

Suppose you have a public bot. How much money should be in the account for a profit of a million rubles per month? A lot. Simple math. You have one hundred shares worth one hundred rubles. If these stocks doubled, then your return is one hundred percent. It sounds great, but instead of ten thousand rubles, you now have twenty thousand rubles. In order for you to make a million from these shares, they must grow a hundred times, that is, by ten thousand percent. As you understand, in the conditions of the real market it is simply impossible. Therefore, in order to make a big profit, you must initially have the funds to invest. If we go back to the “Best Private Investor” list, then even there the first place with a yield of 869% received a million from 143 thousand rubles. And to earn billions, you have to invest tens of millions. Therefore, if you have

Technical faults and correct settings

Trading robots, like any machine, algorithm or program, are not without technical problems. For example, you hosted everything on a virtual private server. But your client crashed and everything immediately stopped working. Another example is that the creator made a critical mistake while programming. For the first ten, one hundred, a thousand or more cycles, it is not detected. But sooner or later it will show itself and, for example, will start buying up all the shares at an inflated price, and selling them at a lower price. There are dozens of similar cases, but the main thing to understand is that the trading robot is not perfect, if you do nothing, it will always break.

In fact, if you are completely unfamiliar with investments and at least partially do not understand the operation of the algorithm, then there is a 99.9% chance that you will lose your money.

Karl Marx Capital. Briefly

Let’s go to one of the popular sites for the sale of trading bots and look at the price. The most popular offer costs £95 or 9500 rubles. An acceptable price for untold riches.
True, the question immediately arises – if the creator has an incredible trading bot that can bring thousands of percent of profit per year, then why should he share it? Everything is pretty simple. The creator makes a profit not from shares and investments, but from the fact that he created the product. But the buyer will try to make money from nothing. This is where Karl Marx’s Capital fits in perfectly. If a person offers a way to increase your funds for your own money, then he just wants to deceive you. If his strategy worked, he would use it himself.

Publicity

Here we come to the main reason for the failure of all public trading robots. And here everything is quite simple to explain. As long as you know the algorithm of work, the trading bot will function correctly, and the profitability will be really high. But as soon as other people find out about it, everything will go downhill. This is why no public bot will ever make you a millionaire. There is no magic button “Bablo” – behind a million-dollar profit there is always hard work and long education or rich parents.