If you have just started swing trading, you may be wondering if a swing trading bot can help you in your operations.
In this article on AtoZ Markets, we are going to talk about swing trading bots, a solution for those people who like trading but don't have time to spend many hours in front of the computer. Thanks to this, we can operate 24 hours a day, something that would not be possible without automation.
If you want to know if swing trading bots are profitable and how to use them, do not stop reading.
What is Swing Trading?
Swing trading is a type of trading that operates medium/long term . It is about taking advantage of market movements through open trades for days and even weeks.
It consists of understanding how the price moves and going for specific sections of its movement . We are going to hunt clear advances, from one point to another.
Basically it is about detecting opportunities between market movements.
Applying swing trading, you can win whether the stock market rises or falls and the operations last, as we already said and depending on the type of strategy used, or a few days or a few weeks.
We are choosing the strategy according to how the market behaves; so we earn more money with less effort.
Swing trading can be done with CFDs, Forex, stock indices and commodities.
How Swing Trading Works
To start being a swing trader, you should help yourself by:
- Technical and fundamental analysis
- Volatility
- Graphic patterns
- Supports and resistance
Really, what you are going to have to look at is to follow the trend or to operate against it.
To do this, we will use the levels of support and resistance that are maintained to operate against the trend. Instead, when these levels break, we will trade in favor of the trend.
Volatility is another key factor, because the more volatile the market is, the greater opportunities we will have to open our positions due to its multiple movements.
For this reason, pattern recognition on charts is important, both when trading and entering Stop loss orders. This recognition tries to look for patterns in price movement, keeping track of support and resistance changes.
To swing trading, you don't have to be constantly on top of the market. It is enough to dedicate half an hour a day to it, and this time can be at night. This, however, brings us to the main topic of today, swing trading bot. What is it?
What is a Swing Trading Bot?
Many people are confused by what a swing trading bot is and what it is not. In a nutshell, a swing trading bot is a computer program that creates and submits buy and sell orders to trading platforms based on the rules of a pre-defined trading strategy. For example, a very simple trading bot might be programmed to sell EUR/USD when the price of the pair reaches a certain threshold.
In short, a swing trading bot enables trading based on data and trends—not on emotional impulse. Ultimately, this usually grows their profits, minimizes their risks, and limits their losses across exchanges. Furthermore, swing trading bots can produce passive income 24 hours a day. Whether you’re sleeping, biking, giving a presentation, whatever: you could also be earning from automated trades.
Bots for swing trading should not be seen as a shortcut to trading success, but rather just another tool that can be used to build an effective strategy. Traders still need to do their homework and learn about their chosen markets.
How Does a Swing Trading Bot Work?
How does a swing trading bot work? Because we have summarized and simplified its definition, it may not yet be clear to you how a swing trading bot works.
This computer program works on the basis of algorithms designed to evaluate market conditions, trends and indicators.
After performing these tasks, swing trading bots can make decisions about buying or selling currencies on different online platforms.
They are automated systems that operate based on a strategy focused on the search for trends. That is why trading bots can identify movements such as rises and falls in the price of financial instruments.
Although they do not carry out a great diversity of operations, this software helps the investor to determine what the market environment is and which currency is best for him to buy or sell.
To briefly summarize the functions that algo trading bot fulfills, we have to mention the following:
- Analyze the markets, that's why study the market prices.
- Extract statistics and graphs to determine the exact situation of the market.
- Examine the economic news that can affect the markets.
- It operates automatically by investing in currencies in order to achieve maximum profitability.
- Interpret the market based on a detailed analysis of it.
Definitely, swing trading bot, also called FX trading robot, has come to change the way of investing online.
Is a Swing Trading Bot Reliable and Profitable?
The swing trading bots like those provided by eToro are reliable and profitable for those expert users, who know how to apply their financial knowledge to the bot. For example, customers have used trading algorithms to great effect and at times they have been known to show a success rate in excess of 70%.
However, it is important that the trader employs an investment strategy and sets a goal. The profitability of the Forex market has increased from 2001 to 2019, progressively.
According to the ECB report, last year there was 6.6 trillion dollars in daily currency turnover on FX. The trading bot is incorporated into an online platform and works, automatically or manually. The robot executes, in real time, the orders of a user.
Thus, the bots for swing trading analyzes the market and executes the strategies.
One of the advantages of bots is that they can operate, simultaneously, in different markets. An impossible action for a human.
How to Choose the Right Swing Trading Bot
Are you considering purchasing one of these swing trading bots? Sadly, the Forex robot market is full of scammers and unscrupulous people looking to steal your money. Don't fall for scams. Follow these tips when choosing a swing trading bot and not take high risk or lose your money.
1. Don't Google
Perhaps the first thing you think to do is Google "which is the best bot for swing trading" or "best swing trading bot". However, this time it is a good idea to give up using the reliable Internet search engine.
Many scammers are also experts in the art of SEO; position your website in the first places of the search results. Therefore, when using Google, the first page results are likely to be from untrustworthy individuals with questionable forex trading software.
2. Do your research on forums and review sites
The right place to find a trading robot is on specialized Forex forums. There you can find honest opinions from other traders like you who have already tried different forex trading software on the market.
If you can't find opinions of swing trading robots in the forum, you can create a new topic. Ask other users about their experiences with a certain software to see if they were positive.
Keep in mind that no matter the software, you will always find some negative reviews. Possibly some are justified and others have been for revenge. In any case, don't avoid a trading robot just because it has a few negative comments. However, if the bot has too many complaints and bad comments, you better stay away as much as you can.
3. Ask for a Demo Period
The best swing trading bots always offer a trial period of a few days so that you know the advantages of the software. If you are considering a program and do not see the possibility of accessing a demo period, contact customer service. In many cases, companies do not release their sample versions for fear of abusers.
On the other hand, if a software provider refuses to give you a sample, you better be suspicious and just look for alternatives. Scammers are only interested in keeping your money, so they don't bother offering free samples and always try to get you to buy as soon as possible.
4. Read the Update Policy
In the world of Forex, staying current is vital if you want to remain profitable in the long run. Therefore, it is important that you pay attention to the update policy of any software you consider.
The providers of the best trading robots charge an annual fee to keep their software up-to-date and provide customer service. This value can be around 10% of the cost of the program.
There are also other providers that offer lifetime updates at no cost, although the price of their software tends to be higher.
At this point, you basically have to decide between making a large initial investment to get lifetime updates (and thus save money), or making periodic payments (more expensive in the long run).
How to Use a Swing Trading Bot
Deciding between swing trading bots is the first step. Once you’ve made your choice you then have a few options as to exactly how you make use of trading signal algorithms. There are different levels of automation and you need to figure out the best way of getting the most out of a trading bot.
Algorithm-generated trading signals can be used in exactly the same way that you would use information from manual technical analysis. For example, you can use signals to inform a trend following strategy. This is the foundation of many common strategies and involves buying on an upwards trend and selling on a downwards one.
It’s also possible to use bots as part of a copy trading strategy. As the name suggests, this involves copying the activity of successful traders. It’s sometimes referred to as social trading and swing trading bots can handle the tracking of a chosen trader’s transactions, as well as opening and closing positions in tandem with them.
You can also use traditional trading tools in conjunction with swing trading bots, such as stop/loss and take/profit orders, which most traders know are invaluable when it comes to managing risk.
Pros and Cons of Swing Trading Robots
When it comes to determining whether swing trading bots work, opinions are divided. On the one hand, there are those who highlight the advantages of automatic trading and, on the other hand, there are those who recommend not using them.
So that you can choose wisely whether or not to use a swing trading bot, we are going to talk first about their advantages and then about their disadvantages.
Among the advantages of trading bots we can mention the following:
- Automatic trading runs fast. It processes the purchase or sale of currencies in a short time, which no professional investor can do.
- The trading bot software guarantees impartiality in decision making. A person can get carried away by psychological or emotional factors that affect their decision-making capacity.
- Trading software can run at any time. Unlike a person, a trading bot can run for long hours with the same level of performance.
- Trading bots are tools that learn from their mistakes due to the constant updating that programmers carry out in this type of software.
- Using a swing bot gives you free time and ensures that you can analyze the market and buy or sell currencies 24/7.
Swing trading bots have other advantages, but it's also important to be aware of their downsides:
- Automatic trading can work well in a market over a period of time. But if this market experiences sudden changes, the effectiveness of the bot can be reduced.
- In the case of cheaper swing trading bots, they may not have the ability to adapt to today's changing market conditions.
- Software cannot replace the reasoning of a human being. Although they carry out the calculations in a faster way, even the best swing trading bot cannot compare to the experience and intuition of an expert investor.
You already know what swing trading bots are and what their advantages and disadvantages are. Now you have to decide whether or not you will invest your money in these computer programs. If so, what is the best trading bot you should choose?
What is the Best Swing Trading Bot?
The best swing trading bot share the following technical parameters:
eToro offers one of the best swing trading bots on the market, based on very powerful machine learning technology. Thanks to it, the broker has created some very juicy investment products!
First of all, there is the CopyPortfolioMomentumDD. This determines which traders on the eToro network are most likely to make money, based on their historical performance. He then collects all these traders and puts them in a wallet, which you can buy. In short, with this robot it becomes possible to copy the best traders in the world in automatic mode. It is not up to you to make the decision. Last year, this robot generated 29% profitability. It is a passive income that cannot be refused.
Subsequently, eToro developed the following trading robot: OutSmart NSDQ. It chooses around 10 stocks from the index based on the decisions of its top traders. In this regard, eToro CEO Yoni Assia states that “We have been able to demonstrate that some of our traders can indeed consistently outperform the NSDQ100 index over the past three years”. This trading robot is therefore very attractive.
Finally, for automated trading, we also recommend using eToro's social trading feature. In concrete terms, you can follow the best traders on eToro in real time, with supporting data. Of course, everyone follows the traders who come closest to their risk profile. It is very comfortable and reassuring. With one click, you can take the same positions as these influential traders. It's good trading and automatic cash flow!