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Next: do the break-even sum for your own rule
Enter your stop, your target and a win rate to see the reward-to-risk and what the rule needs to break even.
What is included
- What it is, in plain words
- The formula or mechanism, with exact arithmetic
- How it hits grid, martingale and DCA bots
- A check you can run before you switch a bot on
Who it is for
- People who run or plan to run a trading bot
- Anyone reading a backtest or a bot sales page
- Readers who want the numbers, not the pitch
- Not advice, and not a signal service
Key facts
- A trading robot is software that watches prices, applies fixed rules and places, changes and closes orders without a person clicking each one.
- Robot, bot and EA mostly mean the same thing. An EA, or expert advisor, is a robot that runs inside a specific trading platform.
- A signal service is different. It sends alerts or ideas and a person or a program then decides whether to act. A robot acts by itself.
- A robot does only what its rules say. In the made-up example below a 30 pip target against a 20 pip stop needs a win rate of 40.0 percent just to break even before costs (calculated by us on 29 Oct 2026, exact).
- A robot removes the clicking, not the risk. The rules, the lot size and the costs still decide what happens.
What a trading robot is
A trading robot is a program with three jobs. It reads market data, it checks that data against a list of rules, and when a rule says so it sends an order to a broker or an exchange. It then keeps watching the trade and closes it by the rules too. There is no judgement in the middle. If the rules did not foresee a situation, the robot does not either.
That is both the attraction and the danger. It never gets tired, never hesitates and follows its rules the same way every time. It also never stops to ask whether the rules still make sense on a strange day. The algorithmic trading page covers the wider field that robots belong to.
Robot, bot, EA and signal service
| Term | What it is | Who places the trade |
|---|---|---|
| Trading robot | A program that trades by fixed rules. The general word. | The program |
| Trading bot | Mostly the same thing. Often used for crypto and exchange software. | The program |
| Expert advisor (EA) | A robot that runs inside a trading platform and uses its data and tester. See expert advisor. | The program |
| Signal service | A feed of alerts or ideas. It may or may not be rule based. | A person, or a program someone connects to it |
The words are used loosely by sellers, so judge by what the thing does. Does it place orders by itself? What are its rules? What size does it trade? Those questions cut through any label. A signal, on its own, trades nothing. A robot that is fed signals is only as good as the signals and its own handling of size and exits.
What a robot is made of
- Data in. Prices, and sometimes volume, time or an outside feed.
- Rules. The entry condition, the exit conditions, the filters.
- Sizing. How big each trade is, which sets the real risk.
- Execution. The link that sends orders to the broker, and handles refusals and errors.
- Guards. Limits on daily loss, number of open trades and when to stop.
Worked example: from rules to a robot
Everything here is made up. Start with rules written as a person would say them: when a bar closes above its 20 bar average, buy. Put the stop 20 pips below and the target 30 pips above. Risk 1 percent of the account. Trade one position at a time. To turn that into a robot every phrase must become something exact.
| Plain rule | What the robot needs | Value in this example |
|---|---|---|
| A bar closes above its average | The close of the last finished bar and the 20 bar average | 20 bars |
| Put the stop 20 pips below | Entry price minus 20 pips, sent with the order | 20 pips |
| Target 30 pips above | Entry price plus 30 pips, sent with the order | 30 pips |
| Risk 1 percent | Lot = balance x 1% / (stop x $ per pip per lot) | lot 0.10 |
| One position at a time | Skip the signal if a trade is open | 1 trade |
On a made-up $2,000 account, 1 percent is $20. With a pip worth about $10 per standard lot, the lot is $20 / (20 x $10) = 0.10. A stopped trade loses $20 and a trade that hits the target gains 30 x $10 x 0.10 = $30. The reward is 1.5 times the risk.
So the robot must win more than 40.0 percent of its trades just to cover itself, before spread and commission. Above that, the arithmetic over 100 trades at four made-up win rates is in the picture at the top of the page. At 50 percent that is 100 x (0.5 x $30 - 0.5 x $20) = $500. This shows what rules can mean, it does not say the rule above wins 50 percent of the time. That is for a backtest and then a live test to find out, and the risk reward calculator does the sum for your own numbers.
Notice what the rules left unsaid, because the robot cannot guess it. What if the spread is wide when the signal fires? What if a bar closes during a news spike? What if the platform disconnects with a trade open? Each of these must be a rule, or the robot does something the author never decided.
How trading robots fail
- Costs. Spread and commission are paid on every trade. They push the break-even win rate above the figure shown.
- Overfitted rules. Rules tuned until the past looks perfect rarely repeat. See overfitting.
- Risky sizing. A robot that adds to losers or doubles its lot, as in martingale, can lose a lot in one run.
- Unforeseen days. Gaps, thin markets and errors are outside the rules unless the author wrote for them.
- Not running. If the machine or connection goes off, so does the robot. Stops held on the broker's server protect open trades.
How to look at any robot
Ask for the rules in plain words, the lot sizing, the worst case and the costs in the test. Run it on a demo or paper account before any real money. The expert advisor page and the install steps show how an EA is loaded and checked.
What this page does not tell you
It does not say that a robot makes or loses money. The example is made up and no real product is described.
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FAQ
Frequently Asked Questions
What is a trading robot?
A program that watches prices, applies fixed rules and places, changes and closes orders by itself. It has no judgement beyond the rules it was given.
Is a trading robot the same as an EA?
An EA is a trading robot that runs inside a trading platform and uses its data. Robot and bot are the general words and EA is the platform version.
How is a robot different from a signal service?
A signal service sends alerts or ideas and does not trade. A robot places the orders itself. A robot can be fed signals, but then its sizing and exits still matter.
What do I need to turn rules into a robot?
Every phrase must become an exact value: the data, the entry test, the stop and target, the lot size and the guards. Anything left unsaid, the robot cannot guess.
What win rate does a robot need?
It depends on the reward-to-risk. With a 30 pip target and a 20 pip stop it is about 40 percent to break even before costs, and more with costs.
Are the numbers on this page real?
Example numbers are made up to show how the maths works, and the page says so. A figure only counts as exact when the page says it was calculated on a stated date. Nothing you enter in a calculator leaves your browser.
Can I use this to decide whether to run a bot?
It can show whether a bot's numbers hold together and how much an account can lose. It cannot say what the market will do, and it is not advice. Use it to ask better questions, then read the terms of your own broker or exchange.
Is this financial advice?
No. It is general education. The numbers are made up and no real product is described.
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