A large number of traders spend a lot of time worrying about the input and output signals in an automated Forex strategy. It is important to understand the general logic implied by the strategy, although we should not overestimate every operation the strategy makes. In general, this strategy is a start for hundreds or even thousands of operations to come. Try to analyse the performance of the operations as a whole and not individually.
Previously, we mentioned the importance of choosing the right automated trading software for the market in which you are trading. More often than not, traders forget this step. These two conditions are mutually exclusive. When the market is in a trend, prices are constant and progressing in the same direction.
An upward trend is one with higher highs and lower lows, while a downward trend has a series of lower highs and lower lows. Ranges, on the other hand, are formed when the market is not moving up or down but the price is consolidating. Generally a price will fluctuate between an upper and a lower limit, known as support and resistance levels. When choosing an automated trading strategy, neither type of market is better or worse - the only thing that should worry you is what kind of market condition your automated Forex strategy is based on.
Now let's see the last item on our list: leverage. This is an area that is commonly missed by automated FX operators. Most of the time, traders expect too much from automated trading strategies before using them. This can lead them to trade with high levels of leverage. And while leverage has the power to amplify your profits, it has the same magnifying effect on any losses.
The danger with automated trading software is that many traders tend to only look at the positive aspects of a strategy and ignore potential losses. This then causes them to choose higher levels of leverage than they should based on their available capital, and can quickly lead to large losses if market conditions change or the Forex bot doesn't perform as expected.
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For this reason, when using automated software, we suggest using effective leverage no more than 10 times. If you are just starting out, you can consider even a lower level, for example 5 times the amount you want to invest. The benefit of using smaller amounts of leverage is that if your FX strategy experiences a reduction, you only risk a small part of your account and, therefore, you would have much more capital left to negotiate, compared to using higher amounts of leverage..
We hope this checklist helps you towards successful automatic trading.
You will begin to implement the best automated trading strategy properly using the right leverage and performance expectations. If you really want to take your trading to the next level, the best way to get started is to learn from those who have been where you are now. The good news is that you can do this with our free webinar series, Trading Spotlight! Three times a week with three pro traders, Trading Spotlight takes a deep dive into the world's most popular trading topics. Find out more and reserve your spot by clicking the banner below.
While our auto trading platforms of choice are MetaTrader 4 and MetaTrader 5, you might want to consider your options on the market. In order to do this, it's important to define your needs and do your research by reading automatic trading reviews. Since automated trading systems vary in terms of speed, performance, programmability and complexity, what is good for one trader might not be good for another.
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Some Forex traders will want a program that generates reports, or imposes stops, trailing stops and other market orders. Other traders, such as those who are less experienced, may want a simpler program with a set-and-forget feature. At their most basic, any automated trading program should be able to perform the following tasks:.
Assuming the programs you are considering can perform all of the above, when it comes to choosing between different currency trading programs, here are some more elements to consider:. Some auto trading firms claim to have a very high percentage of winning trades. However, as the saying goes, if it sounds too good to be true, it probably is. In fact, the main criticism made of automated trading software is of unscrupulous people selling losing algorithms. There are many trading scams on the internet, and it can be difficult for new traders to detect them, especially if you've never tried automatic trading.
Such advertising claims must be verified, and this is where reviews for Forex automation software can be useful. A quick Google search will bring up a range of websites that list brokers who offer auto trading support, as well as reviews of specific automated trading programs.
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On top of this, the best software publishers will provide authenticated trading history results in order to show the effectiveness of the programs they are offering. The golden rule is to understand that past performance is not a warranty of positive future results. While cost shouldn't be your top concern, price competition does currently favour the consumer, so perhaps it's a good idea to shop around for the best deal. Just be careful not to sacrifice quality for price. Prices for trading packages can range anywhere from hundreds of dollars to thousands.
When you're considering different automated trading software, you'll find that some firms provide video content of software programs functioning in the market, purchasing, and selling currency pairs.
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If there are screenshots of account action with trade prices for buy and sell transactions, time of profit posting, and execution — then you should consider checking them out before committing to anything. While testing new Forex automatic trading software, run the tutorial, or any other training function in order to see if it is appropriate and answers all of your questions. Additionally, you may have to call the support desk for answers to complex questions about programming, like the buy-sell criteria, and exploiting the system in general. If a help link is offered to you, check how easy it is to navigate, and whether it's of any use to you.
Some of your questions might not be answered through the information provided in the help section and knowledge base. A high level of service and technical support is crucial for Forex traders at any level of experience, but is especially significant for novices and newbies.
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Often the majority of the leading firms will also offer a free, non-obligatory test of their automated Forex trading robots, so that the potential customer can see if the program is a good fit. In such a situation, test to see if the program can be installed easily, and ensure that you do not have any difficulties with understanding and using it.
Moreover, ensure that the software is programmable and flexible, so that you can change any pre-installed default settings. If you have found some auto Forex software that looks promising, the next step is to test it. Backtesting against historical data will help you confirm that the software behaves the way you want, before you put any money at risk. You can also test the Forex automaton on a demo account over a significant period, or on a significant number of open automatic trades, in order to verify its functioning and its profitability. In fact, you can test automated trading strategies using Expert Advisors in MetaTrader Supreme Edition, a plugin that includes:.
These free trading tools allow you to try a systematic trading tools that can eventually become an algorithmic trading strategy. While it's easy to get caught up in the possibilities of algorithmic trading, it's also important to consider the trading platform you will use. Forex trading software is numerous but only a few are recognised as reliable and robust. This is one of the many reasons why MetaTrader 4 and 5 are the world's most popular trading platforms.
Just as choosing the right trading platform is important, so too is choosing the best Forex broker.
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You could have the ultimate automatic Forex software in your arsenal, but if you aren't trading with a reputable, ethical broker, you might struggle to access your profits. While the previous five points are essential, this list is not exhaustive! Depending on your strategy, you may have additional requirements, for example: If your algorithm uses a hedging strategy, you must make sure to choose a broker that allows hedging.
While automatic trading software is not as simple as most Forex or CFD providers want you to believe, that doesn't mean it's impossible! Like any tool, automated Forex programs are just one that you need to learn. Once you do, they can run your trades for you, while you spend time on the things that are more important to you. It does not matter what level of expertise you have in Forex trading. Whether you are a beginner, an experienced trader, or a professional, Forex trading automated software can help you.
It's also important to remember that past performance does not guarantee success in the future. However, it is a tool that could give you an edge in the market, when used appropriately. Ready to dive deeper? Then why not learn to trade in a safe, risk-free environment with a FREE demo account? It is an easy way to learn the basics of Forex trading and polish your skills as a trader before you progress to the next level.
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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
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