It can be a lot of work sitting at a computer day in and day out with your eyes fixed on the forex market. Watching as all the currencies fluctuate, trying to figure out when to execute a trade. Wouldn’t it be easier if a program could execute perfectly timed trades on your behalf? Well, it turns out that such software exists. Back when online trading first became popular, so did the technology to help make it easier.
What is automated forex trading?
Automated forex trading is very similar to what it sounds like. Specifically, it is the act of trading in the forex market using an automated software that executes trades for you. Basically, you run a program on your computer that contains the trading strategy. At the heart of these programs you will find complex trading algorithms. These algorithms monitor market conditions and execute trades according to its pre-determined strategy. These strategies are typically based on technical trading strategies rather than fundamental ones. Each one is unique as its creator determines the underlying trading algorithm. This means that some may be better than others. It’s also the reason why most companies keep their trading algorithms very secure, especially from outside traders.
Who can use the automated trading software?
Luckily for traders, the automated trading software is available for sale online. Traders of all skill levels can take advantage of this whether theyare a beginner, intermediate or expert in the forex market. Now if you think that the software may be too complex for beginners, you’re wrong. The creator of such software handled the tricky part – developing the trading algorithm. From a user perspective, you simply provide inputs for different parameters related to the trade size and acceptable levels of risk.
There are two types of forex auto-trading software
Consider the two types of automated forex trading software to determine which one is best for you.
Fully automated: Just as it sounds, fully automated software provides a hands-off approach to forex trading. The only involvement required on your end is to set specific parameter values. Beyond that, the actual trades are executed by the program. Parameters relate to the size of the trade and the risk involved, as well as stop loss and take profit orders. This is also referred to with names such as algorithmic, black-box and robot trading.
Forex signal generator: Though, not fully automated there are automated components to this type of software. Again, it will contain an underlying trading algorithm that generates various signals. Upon receiving a particular indicator, the trader is required to manually execute the trade itself.
The benefits of automated trading.
As we’re sure you can imagine, there are many benefits associated with the practice of automated trading. Consider the following.
Immune to psychological and emotional effects. Unlike humans, automated trading software is notprone to psychological and emotional influences. This ensures consistency and clear decisions based on the trading algorithm and specified parameters.
Exceptional ability for technical analysis. Given its computer-like nature, the software isvery effective when it comes to technical trading. This is especially true for people who trade based on currency spreads. The software can immediately detect this and will act accordingly.
Ability to manage multiple accounts. The software can execute a great deal more trades than a human trader can. Not to mention, this may occur across many markets and time zones simultaneously.
You can trade while you’re away. This is convenient if you have other obligations and cannot afford the time to watch the market day in and day out.
All in all, an automated forex software could be your new favorite trading partner. The trick will be to find the right one since there are tons available to traders online.
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