Automated currency trading in the Forex is a relatively new concept that is rapidly growing in popularity among private forex traders. As you are aware there are really only 4 ways to go about trading in the forex market, self directed trading, trade signals, managed accounts and automated trading (or using trading robots).
Automated Currency trading can make Forex trading somewhat easier for you, in that you don't have to sit and monitor each move of the markets. However there are some critical factors you NEED to know before you jump into one of these products.
Factor #1 - The Products "Personality..."
First is that each piece of software has its own personality. In other words each automated currency trading, forex robot, expert adviser, or whatever you want to call them, have a different manner about which they trade the markets.
For instance some systems are trend following systems that use technical indicators such as moving averages and "breakout" schemes to trade with the trend and to recognize a trend shift.
While others are market turn based system such a pivot point trading, or reversal trading where trades are based on market corrections.
What this means is that each system will respond differently -- ie. better or worse - in different markets. While one product my excel in a smooth trending market it will get obliterated in a choppy market. And of course the opposite is true.
Factor #2 - Risk Management...
Each Expert Advisor, Trading Robot, or Automated Currency Trading software product has different means of managing risk. Some handle the trades by hedging with open positions beyond the main position, thus working spreads against themselves. While more often most systems use some form of trailing stop loss.
But even the method of using trailing stoplosses can vary greatly. Some use close stops that get triggered in choppy markets, while others use long stop losses that allow choppy markets to move, yet give up way to much profits in a smooth trending market.
Factor #3 - Money Management...
The last factor is money management, which all told is probably the most important component of any trading system. The fact is that even the lowest performing system can be profitable if money management is handled correctly.
And here's the bottom line when it comes to automated trading: not all systems have a management. This means that if you are well versed in money management you will do fine, however if you are new you could have your profits chewed away by simply being un-aware of how to manage the equity in your account.
Automated Currency Trading With Trading Robots And Expert Advisors...
This means that if you are looking into an automated trading system as an addition to your investing you should be aware of how each product operates and which is best for your own risk tolerance, trading style, and the current market conditions. This is a much larger topic then we have space here to cover. Fortunately there is a great resource on the web that you can use to compare different systems and see forex software ratings and reviews. Click to http://www.forexproductsconsumerreports.com a popular site with actual user reviews and customer feedback of most of the major forex trading products. |
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