Advantages of Automated Forex Trading Software

By David Gregson

Can automated forex trading software trade efficiently in the forex markets? Can you allow a computer to decide for you when you trade in currencies?

The very fact that you have to think about it before you answer the question shows up one major advantage that a computer has over you. Of course the disadvantage you have is your ability to doubt things.

Expert Advisors

Automated forex trading software works by using an expert advisor or EA. An EA is a set of trading indicators that, when the conditions are met, signal a trade. These are then programmed into a script and used in the software. If you did the calculations yourself you would reach the same place, ie. a signal to trade. But what happens next?

The issue with being a person is you might doubt the indicators or doubt yourself. Or you may just get some gut feeling and not open the trade. This is a future prediction after all. The advantage with the program is it doesn't hesitate.

Predictable Currency Pairs

The other major advantage with a robot is its ability not to get bored. It can effectively sit in front of the computer 24 hours studying the numbers and doing the technical analysis. Humans have a lot of difficulty doing this.

As most currency pairs behave in particular ways it's not a problem to set a computer to check them. They either trend or they range. This lets you gather the main characteristics of their movements and write them into a program. All the software does then is look for these movements.

Money Management

But if it were so easy then most traders would make a profit and not lose it like they do. Whichever system you apply it will never be right all the time. For this reason you have to manage your money properly.

You have to adjust your risk to return ratio to match the system's percentage of winners and keep yourself in profit.

Say your rules gave you plus 150 pips for winners but minus 50 pips for losers. In really simple terms you would have to win 1 in 4 trades to stay even. Obviously, this is simplified but the message is your automated trading system does not have to be perfect.

Automated forex trading software can help secure you financial future. The best forex trading software takes the pain out of forex trading. You are only human after all and so are subject to the emotional roller coaster that goes hand-in hand with playing the markets.