What is a Forex bot?
A forex trading bot is a tool that automates placing and closing trades on the foreign exchange market. They are 99% data driven and will use technical analysis and market movements in order to decide if a trade should be placed or not.
How do they work?
Each bot will work differently and will be based on a different strategy. However they are all coded to place trades and close trades when certain things happen in the market. For example the bot may be waiting for a certain forex pair to close above yesterday’s high on a specific time frame in order to place. If this all happens then the trade will be automatically placed on your account.
Are Forex Trading Bots Legal
In short forex bots are legal to use, but the purchasing and selling of these bots can be illegal. For example if a company was to exaggerate the potential returns of a bot then that would be illegal. Also legality is not the only issue you could face when buying a bot. You have to be very careful as there are a lot of scam sites selling bots which may never work as expected.
Furthermore these bots if sold to a lot of people will get banned by prop firms meaning you are unable to use them. It’s a grey area overall as if you were to design and develop your own bot then you would be able to use this across most platforms, however some of the ones purchased online could break the law in some way.
According to FCA (Financial Conduct Authority) if a firm is selling a forex bot that has not been authorised by themselves then that would make it illegal. They advise you to protect yourself from potential scams as well which I will go into next.
Is it ethical?
This is down to personal opinion, but for me it is entirely ethical. As long as the firms providing the bots are not scamming and they are actually producing a working bot then the use of that bot is okay. The bot is intended to make you money which is why prop firms and brokers may not like them, however I see no issue with that. What I do think is entirely unethical though is the companies selling bots for thousands that are a complete scam and don’t work for the user.
How to avoid scams
An instant red flag for me is a bot that is charging a large upfront fee. This doesn’t give the developers any incentive to keep updating the code as they already have your money. However one that charges a monthly fee or even better a performance based fee is far more likely to be legit. If they do a performance based fee, they will only make money when you do, which means there’s no initial outlay for you and you’ll only pay them if the bot is profitable. Also if the team is public this is a huge green flag as they are far less likely to
scam than a completely unknown seller.
Are Forex Bots worth it?
Unfortunately this is not a simple answer as 99% of the bots out there that people are selling will not be worth it. That being said, there are a few performance based bots that really do have amazing results. It’s worth it for them to keep improving as they get a % of what you make using the bot. It’s worth noting that forex bots work much better with personal funds as there are rules against copy trading for most brokers however with prop firms, if too many people are using the bot they will deny payouts for all users. I’ve covered this topic in detail in my Are Forex Bots worth it article, check it out to learn more.
What Forex Trading Bot should you use?
As mentioned above, you should only use a performance based one as it means you will only pay for it when you profit yourself. Here at 1st2Notify we have a forex bot that works on a 30% profit split. This means that if you were to make £100 with our bot we would claim £30 and you would keep £70. We use this fee to ensure we can keep improving the bot and ensuring the long term success that we have had. Another factor that makes ours better than most of the other ones on the market is that you can set it all up on your phone and even if your phone were to die the bot would still act as normal so you never have to worry about that causing an issue.
