Automated Forex Trading – Robots and Expert Advisors
Trade Without Emotions: Automated Forex Trading
Automated Forex Trading Software also known as Expert Advisors (EA) or Robots and means a computer-based application making trading decisions automatically and submitting them to the exchange.
Automated trading systems are also referred to as mechanical trading systems, algorithmic trading or system trading and they allow traders to establish specific rules for both trade entries and exits that, once programmed, can be automatically executed via a computer.
In relation to automation of trading decisions, we can generally divide the traders into three categories: traders who trade only manually, traders use semi-automated trading systems ( meaning they use automated trading combined with some manual intervention) and traders who rely entirely on EAs and robots.
The decision to trade manually or to use automated trading software is entirely yours – I am only assuming that you have an interest in automation if you are reading this page.
In our opinion automatic trading topic is worth exploring and pursuing if you are a highly analytically person who would like to apply mathematical and statistical methods to your trading system.
Automated Trading Explained
Here’s the list of what is needed in order to automate your Forex trading:
- An Expert Advisors or EA’s – the software program that executes a trading strategy automatically without any need for ongoing input from the trader
- A broker that allows the use of EAs
- A server-based trading platform or access to a virtual private server (VPN) so you don’t have to worry about loss of internet services or power disconnections. Some brokers offer VPN services either for free or for a small charge.
Automated Forex Trading Pros:
- Hand-off approach to trading: you can walk away from your PC and the EA will continue to trade for you 24/7
- Minimizes or eliminates emotions – the robots have no emotions; they will trade as programmed, without any doubts, distractions fear or greed
- EAs can send orders a lot faster than a human being, and this can give you an advantage over the competition
- An non-expensive and easy way for beginners to start trading and observe how the approach the market
- Low entry cost: the price of EAs is relatively low and it can be recovered quickly if you trade with a reasonable sized account; also most vendors will have a ‘money back guarantee’ policy that allows you get a refund if you are not satisfied with the performance
- Availability and ready-to-use: robots that are the result of months or years of research and testing are readily available for a relatively small upfront cost
- Ability to backtest to determine and calibrate the performance of the automated system
Automated Forex Trading Cons:
- Potentially, a discrepancy between the “theoretical trades” generated by the strategy and the order entry platform component that turns them into real trades
- Higher costs related to a high availability infrastructure or VPN services
- Computer programs does not take into account breaking news or sudden changes in the market, therefore it is unable to assess the current market condition
- If you want to develop a successful automated trading system instead of buying it then expect to put a lot of time into it