Traders can run accurate trading and money management manually but as time approaches, now these are can be done better with automated trading systems that allow computers to accomplish and monitor the trading. Now many traders turn to these systems and make their trading job automated. There is various reason can be found for which it attracts the attention one of the biggest reason is, it can take emotion out of Forex trading because trades are automatically placed once the given criteria are matched. Read this article to know more about the pros and cons of automated Forex trading.
Automated Forex trading systems can be known in a different name such as mechanical trading systems. These systems allow Forex traders to set specific criteria for both entering and existing and once it has been programmed, it will be executed automatically by computer. Now the question is how to set the criteria. The trade entry and exit rules can be based on simple conditions that usually a trader follows or can be set complicated strategies that require a great knowledge of programming language that is specific to the trader’s using platform or with the assistance of an expert programmer. These automated trading systems generally need such kind of software which is a link to access broker and the additional rules should be written in prior and with the certain platform’s proprietary language.
Some of the automated trading platforms have a certain type of strategy building wizards those are allowed users to choose their criteria from the given lists those are commonly available technical indicators to build a certain type of rules those are can then be automatically traded. There are various options available for a trader that he/she can establish, for instance, there is a long trade can be entered once the 50-day moving average crosses above the 200 days moving average on the only five-minute chart of a specific trading instrument. Apart from that, traders can set certain types of order and when the trade will be started or can that platforms default inputs. However, there are many traders can be found those set the program with their own strategies or assisting the programmer in order to develop the system.
If it established successfully, then nothing to do more and all the steps will be carried out by the computer that will monitor the market to find out the sale or buy opportunities those are based on the programmed trading strategies. Based on the specific rules, in the time when trade is programmed, the orders for protective to stop losses, profit targets, trailing stops will automatically be generated.
Pros of Automated Forex Trading
The automatic trading system works smartly and minimizes emotions all along the trading process as a result traders get it easy to stick to the plan. Trade orders are accomplished automatically once the given criteria have met and won’t let the traders hesitate or making any questions the trade. Contrary, it helps the traders those are afraid to pull the trigger; this system has the ability to control them those are clever to over trade.
Once rules are set to them, systems will work consistently without reacting even in volatile markets. According to experts, discipline always lost for emotional factors such as fear of taking the loss and desire get much within a little period of time. Automated trading helps the traders to maintain discipline following what rules have been set.
Cons of Automated Forex Trading
The main principle behind automated trading is that just set up the software, program that and watch trading. Practically this is a sophisticated way of trading and still, results warp with cladding. The operation is totally depending on the trading platform. If there is any disturbance in internet connection or any system failure, then there an order may not be sent to the market. There are also being some divergence between the theoretical trades generated by the strategy and the order entry platform component that could turn into real trades.
As it is easy for you just turn on the computer and leave that to work automatically, but these systems need frequent monitoring because of high possibilities of mechanical failures such as connectivity issues and power issues.
As these are studded with various advantageous but these are can’t be considered to replace with manually operated trading. Mechanical failures are obvious and frequent monitoring also needed. But if the time comes for using server-based platforms, then these are can be considered as the substitute for the current trading platforms.
Your own forex trading system
This knowledge forms the basis for developing your own forex system. Every successful forex investor has its own investment system: the principles and principles that he uses to select currency pairs and take positions.
Such a forex system is very personal. It depends, among other things, on how much risk you want to take, how much time you have, which currencies are most appealing to you and which analytical tools you prefer to use. In this lesson, we help you to find out which system is best for you. Eventually, you will develop your system yourself and improve on the basis of your experience.
Your forex investment account
If you have not already done so, it is now time to open an investment account at a forex broker. You use these to pass on your purchase and sales orders and to be able to analyze forex charts. There are a lot of forex brokers on the internet, which are not all equally good. For new forex traders its recommended broker Plus 500. This is a reliable CFD broker where your money is safe and has very user-friendly and quickly understandable software. You can open an investment account here at Plus500. If you first want to read more about forex brokers and want to view reviews, you can do so in our forex broker section. CFDs are risky financial products that are suitable for investors with relevant experience.
Most forex brokers offer not only a real forex investment account but also a practice account. Such a practice account is useful to get the broker’s software under control and to see if you like it. You can also test analysis techniques or new additions to your forex system. However, we do not recommend that you continue to work with a practice account for too long.
Trade in forex without commissions and with tight spreads
The reason is that when investing in forex psychology plays an important role and when real money is at stake that psychologically does something with most people. You have preceded many investors who first acted on the currency markets without difficulty and successfully on a practice account. However, as soon as they switched to a real investment account, they felt the tension of the money at stake. They did not dare to open promising forex positions anymore, closed in panic positions at sudden price falls and left profitable positions running too long. In short, from good investors, they turned into emotional gamblers, only because real money was at stake.
You absolutely must try to avoid this. That is why it is a good idea to get used to investing in the foreign exchange market with real money from the beginning. You do not have to start with large amounts immediately. On the contrary, starting small works better and you risk less. But it has to be about something (with an investment account of 300-500 euro you can start very well). In this way, you will get to know your own psychology better and you will become stress resistant and disciplined. That will eventually make you a better forex investor.