An automated Forex trading is a technique of trading in foreign currencies whereby a computer program is used to buy as well as sell currencies. This program is mostly based on a set of analyses which assists the trader to determine whether or not to purchase or sell in a currency pair at a given point in time. This type of Forex trading uses a computer program which the Forex trader instructs to take decisions based on a set of laid down technical rules. The signals generated from the automated program determine whether it is safe for the trader to sell or buy an order.
PROS AND CONS OF AUTOMATED FOREX TRADING
Automated Forex trading system also has some up and downsides. One of the biggest strength of the automated Forex trading is that it tends to reduce the behavioral finance biases which may negatively have an impact on the investment decision making. The Forex traders also have the privilege of performing a back test on the trading system based on previous data which may go a long way in helping them fine-tune their strategies when using real-capital.
The major downsides of an automated Forex system are that it is quite difficult to develop and back testing may lead to a positive result.
THE BEST FOREX BROKERS FOR AUTOMATED TRADING
The best-automated forex broker for automated trading needs to come with some characteristics which can enable the traders to make the necessary decision regarding their investments. Since the trading is carried out mostly without the interference of the trader, it is of paramount importance for the broker to be well informed about the choice they are about to make.
After you are able to ascertain the suitability of the best Forex brokers for automated trading, you can then go ahead to open a demo account with the automated broker before investing your real capital.
Before choosing the best Forex broker for automated trading it is good you have a general knowledge of their algorithmic trading software. By studying the software, you can gain an insight into how the systems work. While many of the systems may offer similar services, the real execution of the algo-trading differs from one broker to the other. The currency pairs which are also available for trading also differ between the different services. It is therefore important to check which algorithmic trading platforms offer such pairs you are interested in.
The algorithmic trading platforms which are provided by the Forex trading systems usually follow a set of defined instructions for the placement of orders. The major aim of the algorithmic program is to identify opportunities that are lucrative and automatically place the trades in a bid to generate profits at a frequency and speed which cannot be done by a human trader and it is the duty of the best-automated Forex brokers to guide you on that.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.