Forex Trading Tools - Robots vs Indicators vs Scanners vs Signals
Trading is difficult; that’s why the idea of any shortcut is appealing. The retail forex industry is overrun with tools and services to make trading easier, but many do the opposite. Our guide explains everything you need to know to avoid making a mistake and wasting money.
Updated 24 April 2024
If you’ve spent more than a few days researching how to start trading forex, you might begin to feel you need a pretty long shopping list. You’ve probably found everything from fully automated trading robots to one-on-one mentorship programs with self-proclaimed gurus. Countless products and services promise to help make all your dreams come true.
While the idea of a magic indicator that can tell you when to open and close your trades sounds compelling, many forex trading shortcuts fail to meet expectations. Even the tools and services created with the best intentions have a high chance of failure. This guide explores the types of shortcuts on offer and highlights what you need to know before considering them.
Know this first
Summary
Our guide explains:
If you’ve spent more than a few days researching how to start trading forex, you might begin to feel you need a pretty long shopping list. You’ve probably found everything from fully automated trading robots to one-on-one mentorship programs with self-proclaimed gurus. Countless products and services promise to help make all your dreams come true.
While the idea of a magic indicator that can tell you when to open and close your trades sounds compelling, many forex trading shortcuts fail to meet expectations. Even the tools and services created with the best intentions have a high chance of failure. This guide explores the types of shortcuts on offer and highlights what you need to know before considering them.
Know this first
- The forex industry is notorious for attracting scammers. If anything sounds too good to be true, it probably is. Read our investment scam guide to prepare yourself.
- Forex trading is tough, and most traders lose their money, which is why shortcuts seem so attractive. Before investing a cent trading forex, we recommend reading our forex trading guide and CFD trading guide.
- People and companies selling shortcuts do not need to be regulated or registered, meaning they can make bold promises, and there is no authority responsible for investigating complaints.
Summary
- There is a plethora of tools and services designed to make trading easier. They typically promote their services to new or failing traders desperate to succeed.
- The most common types of shortcuts are trading robots, custom indicators and signal services.
- A trading robot, commonly known in the forex community as an Expert Advisor, is an automated trading strategy installed on a trading platform and automatically opens and closes trades based on an algorithm.
- A custom indicator is a third-party indicator that can be installed on a trading platform and uses a proprietary formula to identify potential trading opportunities.
- A signal service is a subscription that will alert you to a potential trading opportunity. The service will send an email, SMS or instant message to provide the details.
- A forex market scanner scans dozens of forex trading pairs across multiple timeframes to pinpoint certain conditions.
- Copy trading on platforms like eToro is a popular forex trading shortcut. We’ve already created a dedicated copy trading guide to discuss the topic thoroughly.
- While people selling forex signals, robots, and indicators are not necessarily scammers, it’s worth considering whether these services are necessary or even helpful.
Our guide explains:
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Buying Forex Robots
Automated trading is one of the most effective ways to trade forex. The primary advantage of using an automated trading robot is to ensure consistency and precision by removing human emotions and errors.
However, that doesn’t mean buying a forex robot from a vendor is going to guarantee you’ll start making money the moment you start running the robot. Trading robots need to be optimised for certain currency pairs, timeframes, brokers and market conditions. Without understanding the underlying principles of the trading strategy and knowing how to optimise the robot, it’s unlikely you’ll see success from running even the most revered bot.
There are numerous forex robot marketplaces and developers selling bots for various trading platforms. One of the most popular marketplaces is the official MetaTrader community called MQL5.com, which lets users sell or lease expert advisors and indicators and provide forex signal subscriptions. Another popular marketplace dedicated to the cTrader platform is ClickAlgo.com, which offers cBots (forex robots designed for cTrader), custom indicators and various tools.
The price of a forex robot varies considerably. On the lower end, they can start from NZ$100 and on the higher end will be NZ$1,500. We found one MT4 expert advisor selling for over NZ$18,000 in the MQL5 community.
While there are many examples of proven forex robots available to buy, there are probably many more that don’t work as promised. Many trading robots created for commercial reasons may be engineered to have outstanding backtesting results, but little attention is given towards forward-testing on the live market.
However, that doesn’t mean buying a forex robot from a vendor is going to guarantee you’ll start making money the moment you start running the robot. Trading robots need to be optimised for certain currency pairs, timeframes, brokers and market conditions. Without understanding the underlying principles of the trading strategy and knowing how to optimise the robot, it’s unlikely you’ll see success from running even the most revered bot.
There are numerous forex robot marketplaces and developers selling bots for various trading platforms. One of the most popular marketplaces is the official MetaTrader community called MQL5.com, which lets users sell or lease expert advisors and indicators and provide forex signal subscriptions. Another popular marketplace dedicated to the cTrader platform is ClickAlgo.com, which offers cBots (forex robots designed for cTrader), custom indicators and various tools.
The price of a forex robot varies considerably. On the lower end, they can start from NZ$100 and on the higher end will be NZ$1,500. We found one MT4 expert advisor selling for over NZ$18,000 in the MQL5 community.
While there are many examples of proven forex robots available to buy, there are probably many more that don’t work as promised. Many trading robots created for commercial reasons may be engineered to have outstanding backtesting results, but little attention is given towards forward-testing on the live market.
Buying Forex Indicators
Technical analysis indicators are used to identify market trends and forecast potential price movements. While some indicators can simply tell you whether the current trend is bullish or bearish, others can predict precise entry and exit points.
While the most popular forex trading platforms have dozens of technical analysis indicators preinstalled, the default indicator libraries don’t meet the demands of all traders. Therefore, some traders decide to build their own indicators or buy them online.
There are valid reasons for buying a forex indicator for your trading platform. The most common reason for using custom indicators is that you want to follow data not already shown in your trading platform or create custom formulas.
However, some inexperienced traders are sold on the idea that technical analysis indicators can do all the work and generate simple signals and tell them whether to buy or sell and when to open and close. Usually, these tools are just a combination of one or two basic indicators, possibly with some settings adjusted and graphics showing clear buy and sell signals. For example, in the image below, you can see the arrows and alternating line colour; these indicate where you should enter and exit and the direction of the trend.
While the most popular forex trading platforms have dozens of technical analysis indicators preinstalled, the default indicator libraries don’t meet the demands of all traders. Therefore, some traders decide to build their own indicators or buy them online.
There are valid reasons for buying a forex indicator for your trading platform. The most common reason for using custom indicators is that you want to follow data not already shown in your trading platform or create custom formulas.
However, some inexperienced traders are sold on the idea that technical analysis indicators can do all the work and generate simple signals and tell them whether to buy or sell and when to open and close. Usually, these tools are just a combination of one or two basic indicators, possibly with some settings adjusted and graphics showing clear buy and sell signals. For example, in the image below, you can see the arrows and alternating line colour; these indicate where you should enter and exit and the direction of the trend.
Forex trading indicator with buy and sell signals
While buying indicators to generate signals might work, you won’t know until you start risking your money. A better solution is to learn and understand the indicators you’re using and develop your own strategy, rather than hoping someone else has done the work for you.
While signal generating indicators don’t come with a strong recommendation, there are numerous use cases for buying third-party indicators for your trading platform. For example, you could get indicators to automatically plot pivot points or support and resistance levels or show currency pair correlations or the volume profile.
While signal generating indicators don’t come with a strong recommendation, there are numerous use cases for buying third-party indicators for your trading platform. For example, you could get indicators to automatically plot pivot points or support and resistance levels or show currency pair correlations or the volume profile.
Forex Market Scanners
imilar to indicators, market scanners are valuable tools for analysing the markets. The main difference between indicators and scanners is that indicators are plotted on one chart, whereas scanners will continuously analyse multiple trading pairs and timeframes.
Forex market scanners can be used to identify chart patterns, such as head and shoulders, ascending or descending triangles, wedges, pennants or flags. You can also use them to screen for certain technical conditions, such as volatility, volume, change percentage and much more.
The key advantage of using scanners and screeners is you don’t need to spend hours searching through different charts to find opportunities; instead, the scanner will alert you.
Autochartist is a popular pattern recognition scanner that can be installed in MetaTrader 4 or accessed via a web application to explore emerging chart patterns. Some brokers, such as CMC Markets and IG Markets, provide Autochartist to their clients for free.
Forex market scanners can be used to identify chart patterns, such as head and shoulders, ascending or descending triangles, wedges, pennants or flags. You can also use them to screen for certain technical conditions, such as volatility, volume, change percentage and much more.
The key advantage of using scanners and screeners is you don’t need to spend hours searching through different charts to find opportunities; instead, the scanner will alert you.
Autochartist is a popular pattern recognition scanner that can be installed in MetaTrader 4 or accessed via a web application to explore emerging chart patterns. Some brokers, such as CMC Markets and IG Markets, provide Autochartist to their clients for free.
Authochartist pattern recognition scanner
Tradingview is another popular forex charting application, and it provides a wide range of features for market analysis, including a forex market screener. The Tradingview forex screener lets you configure more than fifty optional filters and prepares a list of instruments that match your filters. You can also set up alerts to be notified when a new currency pair matches your filters.
Forex Signal Services
Forex signal services are the most controversial of all the forex trading tools described in this guide as they are the most simple way to start trading, making them the most appealing to naive beginners.
A forex signal service will notify you when a trade signal is identified. Theoretically, there is no need to do any technical analysis or even have the faintest idea of what’s happening in the markets. Once you receive the notification, you need to follow them in your trading account.
Usually, these services charge anywhere from NZ$50 to NZ$150 per month and often upsell annual or lifetime packages for hundreds of dollars.
It’s tough to evaluate these services without signing up and trying. Many sites use fake user testimonials and show manipulated performance statistics. Some services only send a handful of signals each week, meaning it can take a couple of months to make your conclusions.
Our advice is to stay away from signal services, especially independent services. If you are determined to use forex signals, then try to find credible communities, such as the official MetaTrader community.
A forex signal service will notify you when a trade signal is identified. Theoretically, there is no need to do any technical analysis or even have the faintest idea of what’s happening in the markets. Once you receive the notification, you need to follow them in your trading account.
Usually, these services charge anywhere from NZ$50 to NZ$150 per month and often upsell annual or lifetime packages for hundreds of dollars.
It’s tough to evaluate these services without signing up and trying. Many sites use fake user testimonials and show manipulated performance statistics. Some services only send a handful of signals each week, meaning it can take a couple of months to make your conclusions.
Our advice is to stay away from signal services, especially independent services. If you are determined to use forex signals, then try to find credible communities, such as the official MetaTrader community.
Final Thoughts on Buying Forex Trading Tools
Unfortunately, the forex market attracts a lot of scammers and fly by night vendors, so extra work and due diligence are required before buying anything from anyone. There are no sustainable shortcuts to becoming a successful forex trader. There are tools and indicators to make analysis and trading more efficient, but nothing replaces the years of hard work needed to become consistently profitable.
Frequently Asked Questions
How can I build my own forex robot?
If you already have a trading strategy in mind and want to automate it, you can take a few routes. Firstly, you could try building your robot yourself. However, it requires some background in software development and programming. Other paths you can follow are finding a freelancer on Fiverr or Upwork, or in the MQL5 or cTrader community to build your robot for you.
How reliable are forex signals?
There are endless anecdotes in forex trading forums and communities from traders who have been let down by following forex signals. Most forex signal providers offer low-quality trade setups and rarely justify their analysis. Forex signal providers are unregulated and do not have to provide any transparency. Once their reputation becomes damaged, they just relaunch under a new brand. We recommend staying away from forex signal services and focusing on your own education.
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