In this digital era with innovations like artificial intelligence, machine learning, humanoids and new technological advancements happening frequently in the area, it comes as no shock that automation in Forex trading is rapidly growing. This technology is already used very commonly by institutional traders, however for retail traders it has been made available quite recently.
Automated trading systems also known as algorithmic trading is a computer program which allows the traders to carry out different trading functions. It is a hands off approach to trading which does not require the traders to stay on their account all the time, it performs trading on their behalf.
Automation is attracting the attention of many traders quite quickly due to its many advantages. The most likable feature of using a program is that it is not influenced by human emotions such as fear, greed or indecisiveness, it carries out the function based on technical analysis and predetermined set of rules incorporated in them.
Moreover, automation can allow a trader to trade 24/7 without having to stay at their computer, it can observe the market and act accordingly all the time giving more opportunities to make profit.
It also ensures that the trading strategy or plan you made will actually work or not by getting them back tested on demo accounts, which means running them on previous market data to check if they are beneficial and practical or not.
Furthermore, they work effectively and quickly alongside rapid market changes, analyzing the market and placing or closing the order when their criteria is met.
On the other hand, it does have some disadvantages such as they most likely can be a scam if you have lack of proper knowledge about how to use them or tweak them to your benefit. They also need monitoring from time to time to fix the mechanical errors, connectivity issues and system failures.
As easy as they sound it does not mean that you just have to program your strategies and just leave it as it is, you do need strong knowledge about trading plans and rules first and have a strong command on manual trading as well as automated software.
The best way to use automated trading is to keep in mind to not trust the technology blindly and use your own trading expertise and knowledge to make it work for you in the best way possible. In addition to that, it is necessary to know that technology does have some limitations so do not fall for false promises by scammers and use server based trading platforms and automated traders for minimum mechanical failures.
Automation in forex is not an option right now but a need, as this technological advancement reduces the manual work load and makes your trading more fun and enjoyable rather than full of stress or anxiety.