Automated forex trading can be an excellent way to help many traders build profits and take some of the stress out of currency trading. Sometimes called ‘forex robots’ or even ‘expert advisors’, this kind of automated software can help traders generate large profits with very little effort.
There are several advantages to using automatic forex trading. Here are some things to consider.
Automated Trading Signals
Automated Forex trading software can become invaluable for monitoring currency pairings that you otherwise may have missed. It would be physically impossible for one person to sit at a computer all day and night to watch the intricate changes in currency values as they relate to various other currencies.
However, an automated trading system is able to monitor as many different pairings and crosses as you wish. It will constantly monitor the charts of as many currencies as you want to watch.
Once the software recognizes a definite trend in a particular currency cross, it should generate a trading signal, telling you to either buy or sell. Traders who learn to trust the analytical programming behind the software can realize extra profits easily with just this one feature.
Automated Trading Capacity
Automated forex trading software can also place trades on your behalf. This can be an excellent way to continue building profits even when you’re away from your computer.
The software will monitor and identify a likely winning trade and then place that trade for you on the basis of the analytical information it has been searching through. Once the value of the trade has changed sufficiently to represent a profit, the software will also close out that trade, reaping the profits and reducing your risk.
While the idea behind all automated forex trading software is the same, the actual programming behind them can vary greatly. Most software creators advertise that their software has a high success rate in picking winning trades during backtesting functions.
This is where the creators will enter in several weeks or months’ worth of currency value data and allow the software to run as though it was really trying to identify pricing trends. Then it will pick various trades and the results are measured against actual currency pricing changes.
Of course, the accuracy of backtesting results might look spectacular, but it’s important to determine whether that same automated forex trading software will have the same success rate using real-time data.
If possible try to locate an automatic forex trading platform that has been backtested on historic data, as well as tested using real-time data. This should give you the best results.
The majority of automated trading robots will offer the capacity to automate your trading activities across just the seven Major currencies. These are usually USD, GBP, EUR, CAD, JPY, CHF, and AUD.
While this might initially look very limiting, it’s important to realize that there are many successful traders who only ever trade using the more stable, major currencies. Many smaller, or emerging currencies tend to be far more volatile and less predictable.
Be sure that the automated forex trading software you consider gives you the capability to trade across the seven major currencies, but don’t worry about the lack of smaller currencies, as there is still plenty of profit to be made.