Automating Your Forex Trading

Automating Your Forex Trading

Automating Your Forex Trading

Automated forex trading has become increasingly popular over the years, with more and more traders of all experience levels seeking an alternative means of trading the forex markets with less emotional attachment and time commitment.

A large percentage of daily forex transactions are executed by automated trading software, and this will likely increase over the coming years as trading algorithms become more advanced and attractive to investors.

The purpose of this article is to explore the fascinating world of automated forex trading, how it works, the pros and cons you need to consider, and where you can find automated forex software.

What Is Automated Forex Trading?

Automated forex trading refers to a software program that has been designed to analyse and trade the currency market, and in most cases, without human intervention.

Other terms such as algorithmic trading, black-box trading and robot trading are widely used to describe the same process of automating trades based on pre-determined criteria, such as price trends and technical indicators.

With so many different indicators and strategies available to a forex trader, virtually any combination of technical analysis and user-defined criteria can be used to program automated forex software.

What Is Automated Forex Trading

To run automated forex software, users will generally need to install the program on their trading platform and activate it. Some trading platforms might even include basic automated trading systems to try out for free.

Once automated forex software has been installed, a trader simply needs to open their trading platform, switch the software on, and the program will effortlessly scan for the next trading opportunity using the predefined criteria for which it was designed.

As soon as a trading opportunity has been found, the software will automatically make the trade. In most cases, automated forex software will only make trades with your computer running and your trading terminal open.

The Benefits of Automated Trading

When it comes to forex trading, automating your trades can provide a number of advantages.

First and foremost, automation can help to take the emotion out of trading. All too often, traders make impulsive decisions based on fear or greed, rather than logic. This can lead to costly mistakes.

Automated forex software also execute trades according to pre-determined rules and settings and strictly adheres to them – which eliminates poor discipline.

In addition, automated trading software can allow traders to manage multiple trading accounts at the same time, which can be a difficult endeavour for a manual trader with a single computer.

Last but not least, automating your trades can save you time. Rather than spending hours analysing the markets and making important trading decisions, you can let the software do the work for you. This frees up your time so that you can focus on other aspects of your life.

The Drawbacks of Automated Trading

Although the benefits of automated trading systems are great, it is important to note that they are not perfect. There are also some disadvantages that need to be considered before you attempt automated trading. Here are some drawbacks of using an automated trading system:

  • They can be expensive. Most traders do not have the technical know-how or the time to program their own automated systems, so the only option may be to buy one – which can be expensive.
  • They may require updates from time to time. As the market changes, your automated trading system will need to be updated to adapt to changing market conditions.
  • Be aware of scams. There are hundreds if not thousands of automated trading systems available for purchase on various marketplaces. This inevitably leads to scammers selling software that does not work as they might have led you to believe.
  • You still need to monitor your account. Just because you have an automated trading system does not mean that you can have a complete hands-off approach. As with any computer program, glitches and errors can occur from time to time, which can lead to unexpected losses.

Expert Advisors (EAs)

Expert Advisors (EAs) are automated forex trading programs that run on the MetaTrader 4 (MT4) trading platform using a proprietary programming language called MQL4.

This coding language allows users of the MT4 platform to either create custom indicators or automate their own trading strategies.

The Benefits of Automated Trading

Traders who do not have the necessary coding skills to program their own automated systems can also buy EAs from the MetaTrader marketplace, which has a wide selection to choose from. It is even possible to rent an EA if you are not ready to buy one yet or download a demo version.

Novice traders can also explore free EAs – this way, they can learn how they work before they move on to more advanced automated forex software.

Social Trading

Social trading otherwise known as copy trading or mirror trading, offers a viable alternative to automated trading, and it shares many of the same benefits that automated forex software has to offer.

With social trading, investors can follow top-performing traders, also known as signal providers, and automatically copy and replicate their trades on their own trading platforms.

Social trading can offer many benefits, including the ability to learn from experienced traders, access to exclusive content and analysis, and the opportunity to build a network of like-minded investors.

The Best Automated Trading Brokers

Picking a supportive online retail forex broker for the kind of automation you have in mind can be very important to the overall success of your automatic forex trading software.

Depending on your needs, you will want to make sure that the broker you select supports the trading platform that your automated forex software was built to function on.

Broker Features Regulator Platforms Next Step
Number One Broker tickmill_logo-173% of retail CFD accounts lose money Founded: 2014
73% of retail C...
  • Well regulated
  • Ultra-fast and high leverage trading
  • Spreads as low as 0.0 pips
  • Comprehensive research tools
  • Relatively limited number of markets
  • Does not accept US traders
Blackbull LogoYour capital is at risk Founded: 2014
  • User-friendly platform with great trade-analysis tools
  • Leverage Up To 1:500
  • Spreads as low as 0.00 pips
  • Quality trade execution thanks to high-spec IT infrastructure
  • $0 minimum account opening balance
  • 26,000 tradeable instruments
  • Not available in all jurisdictions
  • Regulatory infrastructure
Your capital is at risk Founded: 2006
Europe* CFDs ar...
  • Multi-asset broker offering a wide variety of markets
  • Strong regulatory framework
  • Innovative risk management tools
  • Choice of market-leading platforms
  • Wide spreads on some markets
  • Expiry date on Demo Accounts
ASIC, FSA, FSB, MiFID MetaTrader4, Sirix, AvaOptions, AvaTrader, Mirror Trader
Between 74-89% of CFD traders lose Founded: 2010
Between 74-89 % of retail investor accounts lose money when trading CFDs
  • Low trading costs
  • Great market flow
  • Research and analysis which helps spot trades
  • Wide range of Copy and Social Trading options
  • Limited range of non-forex markets
ASIC, FCA MetaTrader 4, MetaTrader 5, cTrader
eToro Logo77% of CFD traders lose Founded: 2007
77 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
  • Social and Copy Trading Platform
  • Beginner Friendly
  • Risk-free Demo Account
  • Top-tier regulation
  • Limited means of raising queries
  • Withdrawal process isn’t really ‘client-focused’
ASIC, CySEC, FCA eToro Platform
XM LogoYour capital is at risk Founded: 2009, 2015, 2017
  • Low minimum deposit
  • Super- tight bid-offer spreads
  • Impressive trading platforms
  • Tier-1 regulators
  • Difficult to contact tech support
  • No Crypto
ASIC, CySEC, IFSC MT4 Terminal, MT4 for Mac, Web Trader, iPhone/iPad Trader, Droid Trader, Mobile Trader, MT5
FxPro LogoYour capital is at risk Founded: 2006
  • Very well regulated
  • Comprehensive education section
  • Fantastic customer service
  • No cryptocurrencies
  • Fees could be more competetive
CySEC, DFSA, FCA, FSB, SIA MetaTrader4, MetaTrader5, cTrader, FxPro Edge (Beta)

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    The idea of having an automated forex trading system that can trade for you and potentially make you money on autopilot is an appealing prospect for many forex traders. Not only does automated forex trading eliminate the emotional toll that comes with trading, but it also frees up your time.

    That being said, automated forex software programs are not perfect, and there will inevitably be losing trades. When it comes to buying or trying out a demo automated forex robot, it is crucial that you first backtest the software with historical data to see whether it has indeed been profitable in the past.

    With so many types of automated forex software, such as EAs, available to purchase, it might be worth testing out a few until you find the right one that suits your own trading goals.

    In this article, we also mentioned social trading as a viable alternative option to automated trading systems. Whatever your choice might be in the end, automated forex trading is an exciting way to trade the forex market and is definitely worth looking into, if what you read in this article appeals to you.

    Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.