Investing robot: what is it, how does it work and when is it worth using?

Technology / Date: 04-19-2025

In this topic, we will detail how the investment robot works and talk more about its features.
<h2">How does the little robot work?

The investing robot operates based on programmed algorithms that define investment strategies .

First, it collects real-time financial data such as asset prices and market indicators .

It then analyzes the data to make decisions , such as buying, selling or holding assets, according to pre-established rules.

There are robots that use machine learning to improve their strategies over time.

Either way, investors can usually customize the settings to suit their risk preferences and financial goals.

When is it worth using?

Now that you understand how the robot works, do you know when it's worth using?

Operating in the financial market with risky assets requires a good dose of self-control, discipline and knowledge , skills that cannot be acquired overnight.

The investing robot can, in a way, shorten this path, helping investors to make highly volatile financial investments, even if they are not so experienced.

See in which situations it can be used:

Diversification and passive management : the robot is recommended for investors who want to diversify their portfolio and follow a passive investment management strategy
Discipline and elimination of emotions : They help maintain discipline by strictly following rules and eliminating emotional bias from decision making
Task automation : These are useful for investors who want to automate tasks such as portfolio rebalancing
Cost reduction : Robots typically have lower fees than traditional fund managers, making them attractive to those looking to reduce expenses
Long-term investments : These are suitable for investors with longer investment horizons
Access to international markets : Some robots can facilitate investing in global markets.

Types of investment robots

Just as there are different types of investment, there is a type of investing robot suitable for each trading strategy.

Discover some of them below.

Robot investor trader

The investor trader robot is a software designed to execute purchase and sale operations in short periods of time , seeking profits from the volatility of the capital market .

It uses advanced algorithms and technical analysis to identify real-time trading opportunities and execute high-frequency transactions.

This type of robot is commonly used in markets such as stocks, Forex and cryptocurrencies, where price changes can occur quickly.

Its main advantage is the ability to instantly react to market movements and execute complex strategies such as arbitrage and scalping.

Robot advisor

The robot advisor, or consulting robot, is a tool that automates the management of long-term investment portfolios .

It uses algorithms to select assets based on the investor's risk profile and objectives, in a more passive approach.

These robots are suitable for investors who want a diversified, low-intervention investment strategy that focuses on accumulating wealth over time .

Its main advantages are cost reduction, discipline in executing strategies and the elimination of emotional bias from the decision-making process.

Robot manager

As they say in finance, “never keep your eggs in one basket.” In other words, always vary the types of investments.

It's easy in theory, but in practice, managing different assets is a huge challenge, and that's what the management robot is for.

It is used by investment fund managers and financial institutions to facilitate decisions, automating asset allocation and portfolio management based on specific criteria.

These robots can be programmed to follow certain strategies , such as maximizing returns or minimizing risk.

Black box robot

Also called a “black box” system, the black box robot is a type of investment robot that operates with highly complex algorithms and obscure strategies.

Investors have limited or no access to the underlying logic of trading decisions.

This level of secrecy is often used by hedge funds and financial institutions to protect their data and strategies.

The black box robot is known for its extremely high automation capacity and ability to adapt to different market scenarios , but its lack of transparency can be challenging for investors who want to understand and control the strategies implemented.

White box robot

In contrast to the black box, the white box robot operates with full transparency regarding trading logic and strategies.

It is a type of investor robot that does not receive any prior programming, it is configured according to the investor's preferences.

Investors have full access to the programming and algorithms used, which makes it suitable for investors who want to understand how the robot makes decisions, or who want to adjust or customize strategies as needed.

White box robots are best suited for investors who want a high level of control over their trades and want to learn from the strategies implemented.

Grey Box Robot

As the name suggests, the grey box robot is a middle ground between the black box and the white box in terms of transparency.

It provides a partial view of strategies , allowing investors to access certain parts of the logic while other parts remain closed, balancing the relationship between automation and control.

This allows investors to adjust certain aspects of their strategies while keeping others protected.

This makes grey box robots an option for those who want a combination of confidentiality, automation and data protection in their investment operations.

What are the differences between an investor robot and a trading robot?

The main differences between an investing robot and a trading robot are in the strategies and time horizon .

An investing robot focuses on long-term investment strategies such as portfolio diversification and wealth accumulation, while a trading robot focuses on short-term trading such as day trading and scalping.

The investment robot aims for stability and gradual growth, while the trading robot seeks quick profits by exploiting market volatility.

In short, the main distinction is in the investment approach : the investor is more passive, while the trader is active and seeks immediate profits.

Can the robot be used for any investor profile?

Using an investing robot is not necessarily suitable for all investor profiles.

Therefore, the choice of using a robot depends on each individual's goals and risk tolerance .

Either way, an investing robot is best suited for investors who want a passive approach , portfolio diversification, and long-term wealth accumulation.

However, it may not be suitable for investors who prefer active strategies, have specific financial goals, or want a high level of control over their investments.

Therefore, the decision to use a robot to make money should be based on individual needs and preferences , which can be defined with the help of a consultant or a profile analysis.

Advantages of using the investment robot

Automation using robots is widely used in various sectors, with emphasis on industry, where they are used in assembly lines, and in e-commerce, which uses chatbots for customer service.

In the financial market, investor robots represent the application of automation in routines that would require constant monitoring and risky decisions.

This brings important advantages, as we list below.

Automation

Automation is one of the main advantages of the investing robot, which can carry out investment operations continuously and without human intervention .

In addition to saving time , automatic operation eliminates the need to constantly monitor the market.

The robot strictly follows programmed strategies , which is particularly valuable in markets that operate 24/7.

This way, the investor can maintain a normal daily routine without losing sleep over having an open position.

Discipline

Discipline is another advantage to be considered in investing robots.

They have the ability to strictly adhere to predefined rules and strategies, completely eliminating emotional influence in the decision-making process.

They are able to maintain consistency in investment strategies, avoiding the impact of emotions , such as greed in times of exceptional gains or fear during temporary market declines.

Diversification

Diversification is one of the foundations of a successful investment strategy, and investing robots are particularly effective in this regard.

They are able to distribute resources across different assets and asset classes, minimizing risk exposure and increasing overall portfolio stability.

As we have seen, diversification helps protect your investment against fluctuations in individual assets and reduces the likelihood of short- and long-term losses.

Access to real-time data

Another advantage that investing robots have is continuous access to real-time data.

They are able to collect and analyze up-to-date market information at any time.

This provides an accurate view of the conditions encountered, allowing the robot to make decisions with greater accuracy.

Access to real-time data is essential for event-based investment strategies to function and for rapid market changes, which makes robots particularly suitable for financial assets with high volatility.

Backtesting

The investing robot also opens up the possibility of backtesting.

This functionality allows them to test strategies on historical data to assess their potential performance.

As it is a retrospective analysis, it is very useful for adjusting and improving strategies before applying them to the real market.

In this regard, backtesting helps identify which approaches have worked well in the past and which ones need adjustments, contributing to decision-making.

Cost reduction

Most robots have lower operating fees compared to traditional fund managers.

By automating the analytical process, the investor can save money that would otherwise be invested in management fees and brokerage commissions.

Not to mention that executing transactions is more efficient and cost-effective, as robots can identify trading opportunities quickly and accurately, minimizing execution costs.

Continuous monitoring

As we have seen, continuous monitoring is one of the specialties of an investing robot.

It can monitor the markets uninterruptedly, 24 hours a day , 7 days a week, without the need to stop for lunch or rest.

This capability is especially useful in global markets that operate across different time zones.

The robot remains active at all times, mapping opportunities and managing the investment portfolio in real time.

Objectivity

Investing robots have no feelings. They just do what they were programmed to do.

They make decisions strictly based on predefined algorithms and criteria , without human influence.

This helps avoid the emotional bias that often leads to impulsive or irrational decisions.

Objectivity ensures that decisions are made logically and consistently , aligned with investment objectives.

Access to global markets

Some investment robots have the ability to invest in a variety of international markets.

This opens up a wider range of financial assets to investors in different regions of the world, allowing them to diversify their portfolio and take advantage of global opportunities.

Access to international markets is particularly valuable for investors who want to diversify beyond their domestic borders or who want to escape certain types of fees.