Forex Trading Basics Tutorial 9 -- Automated Forex Trading

For this section of the tutorial, the focus is on automated trading.  When a computer program is used to trade currency pairs based on pre-set parameters that are programmed into the software’s trading platform, this is what is known as automated trading or trading robots.  Hundreds of these programs are in use today, with some working extremely well and others are merely good.  This overview will discuss advantages of trading on automated systems versus the disadvantages.

Automated Trading is Programmed Trading

Using state of the art Neural Net Artificial Intelligence technology to analyze Forex market trading conditions, the Automated Forex Trading method allows a trader to manage the daily buying and selling in his or her currency account.  The augmented computer AI will analyze the trading conditions, allow you to customize your preferences and never miss a pre-programmed request for a trade.  The automated systems handle millions of mathematical and statistical calculations per second, far exceeding the speed of any human trader.

The Automated Forex Trading Systems are developed by programmers to analyze a variety of technical indicators including Fibonacci Retracements, Pivot Points, Volume Analysis, Statistical Correlation and Volatility Analysis.

After properly being installed and set up, Automated Systems will run with no human interaction or “human-hands-off” method of control.  Forex market data will be input live to the system.  Just as a seasoned trader will scan and absorb the latest news from many resources, so will the system continually analyze the same data for trading opportunities.

Automatic Trading Systems Rely on Automatic Win-Rates

Various levels of risk can be associated with each Automated Forex Trading system.  However, most programmers have built in a level of “Win Rate”.  A “Win Rate” is created by programming the system to constantly analyze market data but only place trades with a mathematical probability of winning that trade with a specified percentage or more.

Plus, by adding certain technical data, the trader can create a semi-customized program that is better suited to scan for particular trading opportunities.

Automated Trading Systems Offer Round the Clock Trading

Even the best trader has to sleep sometime.  But, by using an automated trading system, a trader never needs to miss another high probability trade ever again while sleeping.  Forex automated Trading Systems can run single or multiple currency pairs, with complete technical analysis, high “Win Rates” all 24 hours, 6 days a week.  Once installed properly, the automated system will run during the full Forex trading week, scanning the entire Forex market during off hours as well as peak center trading times.

With the flexibility to generate email or SMS notifications, the trader will be alerted when the automated system has uncovered a trading opportunity and has placed a trade.  Then, when the trade is then closed out, a second email or SMS notifications can be delivered to the trader, along with information on the profit generated.

Automated Trading Systems Are Back Tested

To help ensuring that the automated system will behave exactly the way it is programmed to in live trading, the developers will back test it during the program’s development.  Back testing means the program is run through years’ worth of data, making corrections to the program, tweaking systems, and fine tuning the program’s ability to analyze and properly detect winning trades.  The end result of this very thorough testing process is a solid, reliable automated program that has been tested under live market conditions.  Additional testing methods include Beta-versions, which will run the test program alongside the real program first, getting the bugs worked out before allowing it to be accessed by the wider community. Always look for an automated trading system with extensive back testing with real data that is up to date and current.  Software such as these will require regular updates throughout the products lifetime.

Easy to set up, install and run on your existing trading platform, these automated systems can be another tool in the high performance professional trader’s toolbox.  Be sure to check for system compatibility, usually running on MT4 platforms (through Expert Advisors, or EA) if not using the MT4.

Some Automatic Trading Systems are Semi-Manual

Not every professional trader wants a hands-off approach to an automated trading system.  Some providers offer a Semi-Automatic version that uses the exact same AI programming to implement the mathematically based technical analysis.

Although the fully Automatic versions of the automated trading system will take control of the account to place a pre-approved FX trade on the trader’s behalf, some traders would rather be notified first of a possible opportunity to trade and then decide to act on it or not.  In such a case, a Semi-Automatic version of the automated trading system will send out an email or SMS notification that an ideal opportunity has been found to make a statistically winning trade.  After this notification goes out, however, it is up to the trader to decide what to do next.

Many traders find this Semi-Automatic system a better fit for their needs.  In some versions of the Semi Automatic program, traders have the added flexibility of using more currency pairs in the Forex Major and Cross Pairs whereas the fully automated system is programmed for only one.  Both systems will run profit suggestions and stop loss orders, in addition to entry/exit points for a trade and the profits generated.

Also, timeframes cannot be changed on the fully automated system.  Changing between short/medium/long on a Semi Automated system offers traders even more flexibility when looking for profit opportunities.

Benefits of Automatic Forex Trading

Using a well-tested, well-designed Automated Forex Trading System can enhance a trader’s portfolio.  By combining a rules based platform with statistics and mathematics, the Automated System can generate ideal trades at the best times to capture high Win Rates.  Utilizing such a system allows traders to make trades 24 hours a day in a less chaotic, emotion free environment.

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