Automated Forex

Is automated forex trading something that will continue?

Forex Trading Robots

Automated or automatic forex can be defined as the ability to trade forex with the use of a trading program or forex trading robot, without needing a human to physically trade a forex system. With forex, automated trading is an emerging field that began not that long ago.

Note that any returns in a trading system in the past does not equal or guarantee future returns.

There are 2 general categories of automated trading:

1. Automated trading through managed forex. Some, though not all, forex managed accounts are traded via automated forex. In either case, the trading is passive in that you don’t have to do it. But in the case of automated forex, the trading program or robot executes the trades of their trading system, rather than a human team.

2. When you program your own or someone else’s forex system into a program with programming and automatic trading abilities such as a trading program. Some require programming skills (the programming language used is similar to Pascal), while other programs just emerging that will allow you to select parameters and test your system performance.

Aautomatic forex trading systems

What are the features of automated or automatic forex trading, whether it’s with a managed forex account using a trading robot?

They are:

1. You do not have to physically trade the system.

2. Automated trading can take trades at anytime of the day or night. This is particularly important for systems where the performance is increased when taking a majority of trades in the system, which occurs in systems where trading opportunities occur at times when the person may be sleeping or otherwise cannot get to the computer. So being available for trading 24 hours a day, unlike a trader can, will the profitablility of these systems.

3. You can trade multiple systems, such as systems that rely on different types of indicators, or which trade shorter or longer time frames.

4. An automated system is unaffected by a trader’s psychology, which can sometime cause a system to be not traded properly.

5. Enables the development of new systems that may be difficult for a human to trade, such as systems with a high frequency of trades using tick data. Designing a system is no longer be limited by how practical or easy it is for a person to trade it.

Latest developments in automated forex trading

Recently, software has been used to support testing of:

1. Mathematical models
2. Arbitrage models
3. Risk management models
4. Streaming executable prices

It's likely that in the near future there will be more programmers offering their skills to code programmable forex trading robots.

And as an alternative, there will be more providers of “labs” and automated trading software where a trader without a programming background can use a program to design and backtest a forex trading system. This will enable those interested in designing forex systems to do automated forex trading.

Also, there’s bound to be more providers of automated forex via managed forex, that will automatically trade a successful system that their team has already designed.

But of course you’ll have to do your homework to ensure that the system is a good one from looking at their historical or backtested performance, that the providers are legitimate, and what their commissions and fees are.

Related topics:

Click here to learn more about managed forex, a different form of automated forex.


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