Everything You Need to Know About RoboTrading and its Profitability

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By Jacob Maslow

You may feel uncertain about putting your finances in a bot’s hands, which is natural. However, Robo Trading is the next level of trading assets because of how the world is heading towards a technology-based one. In 2018, it was reported by US news that a total investment of $244 billion is under the control of Robo advisors by 2022, and the amount is set to increase.

Robo Trading, no doubt, has been popular in recent years. But is Robo trading worth it? Is it profitable to use this method? Let’s take a look into everything about Robo trading and its profitability.

How Does Robo Trading Work?

As seen already, Robo trading makes it easy for people to trade. So whether you are a newcomer in the forex trade or old, bots make your work easier. This Robo advisor works with algorithms. It follows laid-down instructions to carry out the decisions it makes for your portfolio.

Most robotrading works with a general algorithm known as MPT. This algorithm was discovered by an economist named Harry Markowitz. This MPT works with a Mathematical structure to utilize the different investment strategies. Robo advisors are made to help the user have a good return from their investment using its algorithm.

Is Robo Trading Profitable?

Almost everyone would like to know if Robo trading is profitable. This may be because people feel the need to spread their assets. Managing more than three assets in your financial portfolio may be difficult.

Robo Trading sparked about ten years ago during an economic crisis that made most investors not feel interested in the market. Fortunately, during that period, some companies (such as Betterment and Vanguard) started using algorithms to help investors have more than two assets.

According to a report from S&P Global Market, Robo trading should have up to $450 billion in the future. If you think about this, it is a huge figure, especially considering that Robo trading is just coming.

You will notice a high success rate if you check the historical record of Betterment performance. Betterment has a positive assessment of 88% better than the ordinary investor. This is an incredible performance for a firm that started up only a decade ago.

Advantages of Robo Trading

Robo Trading has positive impacts it has made on trading assets; let’s have a look at some of these positive impacts.

Less Costly

Since Robo trading boycotts using human advisors, it is cheaper to use Robo advisors. However, traditional advisors cost more than your Robo advisor for various reasons, from the workforce to time. Also, some Robo advisors will not require you to pay commission fees every time you want to place a trade.

Everyone can Invest

Robo advisors allow almost everyone to have a chance at Forex trading. Today more and more people are going into Forex, and not everyone wants to start learning about Forex from scratch. With a Robo advisor, forex trading is now much more straightforward. With just about $50, you can join a Robo-trading platform.

Allows competition to thrive

Since Robo advisors allow almost everyone to participate in the buying and selling assets, the market competition becomes tighter than usual.

Also, using Robo advisors has made other companies develop their bots, allowing a competitive economic market.

Portfolio Creation

Robo advisors make it easier to create a standard portfolio. In addition, I will help to do the proper findings and lower risks that can occur when you invest in any asset.

Improved Accuracy

Unlike humans, who make most decisions based on emotions that may lead to errors, Robo advisors make trading more accurate. This is due to the use of algorithms that it makes use of. As a result, Robo Trading will make trading errors to be at minimal.

Disadvantages of Robo Trading

Robo Trading indeed has advantages; still, it has some demerits. Since this article is about all you need to know about Robo trading, let’s see some of the negative aspects of Robo trading.

Inability to set trade yourself

One of the demerits of Robo trading is that the trader cannot trade. This is because the bot virtually controls all the investments and strategies of the user’s portfolio. Therefore, using a Robo advisor may not allow you to customize your plan at will, unlike if it is a human advisor.

Handles Simple investments

The technology used to create Robo advisors is not so advanced, making it unable to handle complex investment strategies. The bot is, however, able to do well for simple techniques.


Yes, even though it is mentioned that Robo advisors are cost-efficient, you should know that it is not so in all cases. For example, suppose you want the bot to handle your portfolios. In that case, it may cost you even more than using a traditional advisor.

Robo Advisor – Types

There are three available types of Robo advisors.


This Robo advisor takes action based on its user’s risk profile. Therefore, this robot advisor will charge very little because it only gives suggestions on the user’s risk profile.


This bot will immediately help its user create a suitable portfolio by creating an account with the Robo advisor software. It makes use of more than one broker to carry out its actions.

Comprehensive Wealth

As the name goes, comprehensive, this kind of bot looks at creating the best type of strategy for the user from a holistic point of view. It begins by understanding the investor’s current financial standing, risk profile, and other factors to give the best possible investing advice.

Best Robo Advisors

If you are considering starting an account with a Robo advisor, there are some great ones in the market. Here is a list of some of the Robo advisor firms you should try.

  1. Wealthfront
  2. Betterment
  3. E*TRADE Core Portfolios
  4. Personal Capital
  5. Merrill Guided

Each of these Robo advisor firms has what they are great in from cost to education and from education to ease of use. To choose any Robo advisor, you must know virtually everything about the firm. To select the best Robot Trading firm, you need to consider its usability, cost, and the quality of its suggestion.


Robo Trading has grown vastly over the past decade. Who knows what will happen in the years to come? Robo advisors brought a great deal of positive change for investors. Thanks to this AI, even those new to buying and selling assets can make a profit. Almost everyone can now join the forex business because of these bots.

With the invention of Robo trading, investors can now save costs in getting financial advice.

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