Let’s be honest—when it comes to trading, forex is where the real money is at. But unless you’re a financial whiz or have years of experience under your belt, trading forex can be a little daunting, right?
That’s where automated forex trading comes in. Also known as algorithmic trading, this is a process by which trades are placed automatically based on pre-determined criteria. In other words, you set it and forget it. But is this the holy grail of trading? Are there any pros and cons to automated forex trading that you should be aware of before getting started?
Keep reading to find out.
Introduction to Automated Forex Trading
A lot has changed in the world of Forex trading over the past few years. Forex traders now have access to various trading tools and platforms, including automated trading software/ Expert advisor(Forex EA)/ robots. As the name suggests, these are software programs that can automatically execute Forex trades on behalf of the trader.
The question on many people’s minds is whether or not automated Forex trading is profitable. This article will explore the pros and cons of using robots to trade Forex.
Different Types of Automated Forex Trading Systems
There are several different types of automated Forex trading systems. The most popular are signal providers and robots. Signal providers give you trade alerts, whereas robots trade for you. There is also a third type of system, which combines the first two.
Both signal providers and robots have their pros and cons. On the one hand, signal providers are great because they can help you learn how to trade. On the other hand, they can be unreliable, and their signals may not always be accurate. Robots have the advantage of being more reliable, but they can’t constantly adapt to changing market conditions.
What to Consider When Selecting an Automated Forex Trading System
When selecting an automated forex trading system, you need to consider several factors. Here are the most important ones:
1. The track record of the system: How long has the system been in operation? What is the system’s win rate? How much money has it made/lost? You can check these stats from sites like myfxbook, MQL5, fxblue and etc. You can also use backtest results, but these can’t be 100% trusted since they can easily be altered or tricked to give a good result when testing. So we recommend sticking to the mentioned website above or your own testing.
2. The type of account it uses: There are many forex account types, and EA could require a specific account type. Also, some brokers don’t allow some trading types used by robots, So you need to check this.
3. The parameters: What currency pairs does the system trade? The trading method used by the EA? is the trading method risky? What is the stop loss and take profit margin?
4. Your own risk profile: How much money are you prepared to risk? What is your time horizon?
5. The cost: How much does the system cost? Are there any monthly fees? (You can download over 300+ Forex Robots for FREE from our website)
- Read More about How to Find a Profitable Forex Robot
Pros of Automated Forex Trading
Some people might tell you that automated forex trading is not worth it because you can’t control the trade yourself. But I’m here to tell you that there are actually some benefits to automated forex trading.
For one, it can be much less stressful than manually managing your trades. If you’re the type of person who gets anxious about making decisions in the market, then automated forex trading might be a good fit for you.
Another benefit is that you can test out trading strategies with ease. With manual trading, you would have to put a lot of time on the line to see if your strategy works. But with automated forex trading, you can simply set up your software on a demo account so that you don’t waste much time or risk any real money while testing. You also can test the EA on years of historical data within minutes.
Finally, automated forex trading can help you stay disciplined with your trading plan. It can be easy to get emotionally attached to your trades and make decisions based on emotions instead of logic. But with automated forex trading, you can stick to your plan because the software will only execute trades according to the rules that the developer places.
- Read More Why People Use Forex Robots
Cons of Automated Forex Trading
There are some cons to consider before deciding if automated Forex trading is right for you. One of the biggest drawbacks is that there is a lack of human interaction. When you trade Forex manually, you have the opportunity to learn from your mistakes. With automated Forex trading, you don’t have any of that.
Another downside is that you can’t always trust the systems. There have been cases where people have lost money because the system they were using made trades that weren’t profitable. If you are going to use an automated system, make sure you do your research and only use a system with a good track record.
Finally, you need to be aware of the fact that you can lose money with automated Forex trading just like you can with any other type of trading. The market is volatile, and there is always the potential for losing money. If you are not comfortable with the risk, then automated Forex trading may not be right for you.
Tips to Maximize Profits With Automated Forex Trading
- Use a VPS: A Virtual Private Server (VPS) allows you to trade with an Expert Advisor (EA) 24/7. This is because a VPS keeps your computer online and connected to your broker’s server even when you are not at your desk. Using a VPS is essential if you want to trade with an EA. (Reliable and Trusted FOREX VPS – FXVM)
- Set realistic expectations: When it comes to automated forex trading, it is important to set realistic expectations. This is because no system is perfect, and there will always be losing trades. However, by managing your risk and setting sensible stop-losses, you can still profit even if your win rate is below 50%.
- Test, test, test: Before live trading with real money, it is essential that you test your trading system on a demo account first. This will allow you to see how the system performs in live market conditions without risking your capital.
- Have a plan: Even though automated forex trading takes the emotion out of trading, you still need to have a solid plan. This plan should outline when you will enter and exit trades, what you will do if the market moves against you, and how you will manage your risk.
- Stay disciplined: It can be tempting to interfere with your automated forex trading system when it makes a losing trade or two. However, staying disciplined and letting the system do its job is essential. Remember, even the best systems will lose trades from time to time.
- Read More Why Forex Robots Blow Accounts?
So, is automated Forex trading profitable? In a word, yes, but there are some caveats. Namely, automated Forex trading requires a high level of technical proficiency and a deep understanding of how the markets work in order to be successful.
Additionally, automated Forex trading systems are only as good as the algorithms they are based on, and it’s essential to make sure you are using a system with a proven track record. With that being said, automated Forex trading can be a profitable and efficient way to trade the markets and is an excellent option for traders who don’t have the time or inclination to trade manually.