If I told you there was a foreign exchange (forex) trader who is smart, unemotional, logical, ever-vigilant for profitable trades, and who executes trades almost instantly when the opportunity arises and then posts the profit to your account, wouldn't you want to hire this person right away?
Well, with automated forex trading software, you can have all of those qualities and more. Also known as algorithmic trading, black-box trading, robo or robot trading, automated forex trading programs offer many advantages. It is designed to function without the presence of the trader by scanning the market for profitable currency trades, using either pre-set parameters or parameters programmed into the system by the user.
In other words, with automated software, you can turn on your computer, activate the program, and walk away while the software does the trading for you.
How Does Automated Forex Trading Software Work?
Automated forex trading software runs on a program that analyzes currency price charts and other market activity over multiple timeframes. The software identifies the signals – including spread discrepancies, price trends, and news that may impact the market – to locate potentially profitable currency pair trades.
For example, if a software program using criteria the user sets identifies a currency pair trade that satisfies the predetermined parameters for profitability, it broadcasts a buy or sell alert and automatically makes the trade.
The Upsides of Automated Forex Trading Software
A major advantage of automated forex trading software is the elimination of emotional and psychological influences determining your trading decisions in favor of a cold, logical approach to the market. Beginner and even experienced traders may sometimes make a trade based on some psychological trigger that defies the logic of market conditions. With automated trading, such all-too-human lapses of judgment just don't occur.
That's because automated software is intended to make your trading decisions unemotional and consistent, using the parameters you've pre-established or the settings you've pre-installed.
For currency speculators who do not make trades based on interest rates but rather on currency spreads, automated software can be very effective because price discrepancies are immediately apparent, the information is instantly read by the trading system, and a trade is executed.
Other market elements may also automatically trigger buy or sell alerts, such as moving average crossovers, chart configurations such as triple tops or bottoms, other indicators of resistance or support levels, or potential topside or bottom breakthroughs that indicate a trade signal.
An automated software program also allows traders to manage multiple accounts simultaneously, an advantage not easily available to manual traders on a single computer.
Serious traders can also benefit from automated software, as their other interests, obligations, or occupations may not afford them the time they need to study markets, analyze charts, or watch for events that affect currency prices. That means that night or day, around the clock, the program is at work and needs no human, hands-on supervisor.
Selecting an Automated Forex Trading Program
There is no one-size-fits-all approach to forex trading, and the same goes for your automated software – every program has a number of trade-offs.
Of the numerous automated forex trading programs offered on the market, many are excellent, even more, are good but are not comprehensive in their features and benefits, and a few are less than adequate.
Although some firms advertise "over 95% winning trades," consumers should verify the validity of all advertising claims. In some cases, software providers will provide authenticated trading history results to demonstrate the efficacy of the programs they're selling. However, it's important to be cognizant of the oft-used disclaimer – past performance is no guarantee of future results.
Below, we've outlined a few of the key selection criteria for traders considering automated programs.
For instance, some traders will want a program that generates reports or imposes stops, trailing stops, and other specific market orders. Real-time monitoring is also a "must-have" item in an automated system. Other traders, especially beginners and the less experienced, may want a simpler "plug and play" type of program with a set-and-forget feature.
Remote access is also essential if you're a frequent traveler or intend to be away from your computer for an extended period. A web-based program may be the most useful and practical means of serving the needs of a roaming trader, as they're guaranteed to function with a basic WiFi signal.
In lieu of generic WiFi, Virtual Private Server (VPS) hosting is a service worth considering for the serious forex trader. The service provides extremely fast access, isolates the system for security purposes and offers tech support.
Firms may also offer programs with return guarantees after purchase and during a specified period of time. Therefore, if the user decides the program is unsatisfactory, those firms will allow you to return it for a refund.
It's also worthwhile to check out online customer reviews of many of these programs for an additional viewpoint on their virtues and flaws. Some programs offer a free trial period or other incentives to buy, while other vendors provide a free demonstration to familiarize the user with the program.
When testing a new software system, run the tutorial or training function to see if it's adequate and answers all of your questions. You may have to call the support desk for answers to complex questions about programming, such as setting the buy-sell criteria and using the system in general. If a "Help" link is offered, determine ease of navigation and usefulness. Some of your questions may not be answered through information in the help section, and knowledgeable support from the system provider will go a long way to making a seamless trading experience.
Firms may also offer a free, no-obligation test of their software so that the potential buyer can determine if the program is a good fit. If this is the case, test the program's installation and user experience functionality. Also, make sure the software is programmable and flexible in the case you may want to change any pre-installed default settings.
Automated Forex Trading Software Purchase Checklist
The most popular automated software systems will trade the leading currency pairs with the highest volume and most liquidity, including USD/EUR, USD/CHF, USD/GBP, and USD/JPY.
Trading approaches will vary in risk, with programs geared to scalping a few points in a trade to taking larger bets. The user should be able to dictate which approach to use, and the strategy may be adjusted in either direction.
Customer product reviews that are posted online are a good source of information about the software. It's highly advisable to read these before buying.
Price competition currently favors the consumer, so shop around for the best deal, but don't sacrifice quality for the price. Prices for trading packages run the gamut from hundreds of dollars to thousands.
Look for a high level of technical and service support. This is essential for traders at any level of expertise but is especially important for beginners and newcomers.
Beware of Automated Forex Trading Software Scams
Scams are an unfortunate reality in the automated forex software market, but they may be avoided by conducting due diligence on any firm. Check the websites of both the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) for consumer alerts.
On the CFTC site, this information is available by clicking the link under consumer protection. The NFA site has a database of registered member firms.
In summary, automated forex trading software is a powerful tool that can help traders make more objective and consistent trading decisions. By using pre-set parameters and advanced algorithms, these systems can identify profitable trading opportunities and execute trades with precision. However, it's crucial for traders to carefully select the right software for their needs, considering factors like speed, performance, fees, and customer support. Additionally, always be cautious of potential scams and verify the authenticity of any software before making a purchase. With the right automated forex trading software, traders can enjoy hands-free trading and potentially improve their trading results.
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The fundamental premise of technical analysis lies in identifying recurring price patterns and trends, which can then be used to forecast the course of upcoming market trends. Our journey commenced with the development of AI-based Engines, such as the Pattern Search Engine, Real-Time Patterns, and the Trend Prediction Engine, which empower us to conduct a comprehensive analysis of market trends. We have delved into nearly all established methodologies, including price patterns, trend indicators, oscillators, and many more, by leveraging neural networks and deep historical backtests. As a consequence, we've been able to accumulate a suite of trading algorithms that collaboratively allow our AI Robots to effectively pinpoint pivotal moments of shifts in market trends.