Trading robots are computer programs that are said to help investors get an idea what stocks will most likely make them profit. These robots are under a lot of scrutiny from potential investors and critic alike and of the biggest questions are as to whether it works or not.
Before one can understand what a trading robot is, it is first important to gain an idea of what trading is and how can investors make money of it.
Trading is the practice of buying and selling stocks with the goal of making a profit out of the difference between purchase and selling price. This type of financial trading used to be exclusively handled by banks and other financial firms who employed all sorts of trading strategies. With the advent of online trading, however, more and more people are able to participate in it.
What is a stock trading program?
A stock trading program is computer software that has been programmed to study stock market trends. It predicts and sends out tips to its users on what stocks are more likely to rise and on which stocks the investor can make the most money from.
The story behind the origin of the stock trading program varies from promoter to promoter. Some claim that an ex-stock trader is behind its creation, while others claim that software geniuses were the ones behind its invention. Nonetheless, these robots all have one goal and that is to help investors make money.
When an investor purchases the rights to use a stock trading program, they are either emailed stock tips or are given access to a website where they can get tips and information on trends. The investor then decides whether he/she wants to invest on a stock touted by the this robot. The buying and selling of stocks may also be done via the stock trading program. The result of the investment will also be delivered to the investor via the stock trading program.
Does it Really Work?
A stock trading program does work, but with a catch. Investors do see increases in their stocks, but some are concerned with the mechanisms of how the rise in stocks occurs.
The thing is, stock trading programs employ a trading strategy of investing in 'penny stocks'. These are common stocks that are traded over the counter and sell for less than 20 cents a share. These stocks are known for being volatile and investing in them is considered a high risk trading strategy. Their small size means that even a small amount of buyers will reflect as a significant raise in their stock rating. Inversely, penny stocks also fall rapidly when investors sell.
Another issue with a stock trading program is whether or not the software program really predicts stock increases. Some experts argue that the increases seen with a trading robot is just the effect of an increase in investment as a result of the tips sent out.