As a hands-off investment method, forex automated trading utilizes powerful software and instruments. Forex transactions are executed on behalf of investors by a computer program that studies price trends, decides whether to buy or sell, and then executes the trades.
Institutional FX traders have used automated trading robots for many years. Ordinary investors can now access trading bots for desktops, iOS, Android, Windows, and other platforms.
This post will show you what automated forex trading does and which types of bots traders primarily use in 2022.
Automated Forex Trading Systems You Need to Know
Some automated forex trading systems monitor the market for price patterns and automatically place transactions. The developer sets up rules and criteria for using the software, but each forex trader can change them.
Investors who have a working knowledge of computer programming can create Automated trading robots. As a result, they have control over the size of the position and how much profit they can make before it is closed.
Automated forex trading systems, such as Expert Advisors (EAs) based on technical analysis, can be built on MT4 and MT5. Also, there are other easy-to-learn programming languages, which are popular among novices. For example, traders can use Python and R for programming automated forex trading systems https://www.ibm.com/cloud/blog/python-vs-r.
Different Automated Forex Trading Methods
We can divide Forex trading strategies into two categories:
- Fully Automated Trading Systems: it generates signals and executes trades for you (openings and exits). Forex auto trading robots are another name for them.
- Semi-Automated Forex Trading Systems: It allows human interaction, including those that would enable lot size, stop losses, take profits, and other risk-management criteria to be specified. Their recommendations are made using an established set of standards and helpful information derived from technical analysis. However, the investor has to carry out the planned trades manually.
Popular Automated Forex Trading That People Use
Copytrading (Fully Automated)
Copy trading is an excellent method of forex automation. You may learn from the professionals while saving time and money by using this method of currency speculation. You don’t have to be an expert investor to succeed in the stock market.
Most trading platforms let you “follow” or “copy” an investor. As a result, your account will take the same positions as the investor you choose.
MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are the most-used copy trading platforms.
The automation-related aspects of the auto robot solutions outlined above are extensive. It’s possible to get free and utterly automated forex trading software downloads for the MT4 platform and MT5 platform, for example.
You can find alternatives that do not use bots but have an excellent copy and social trading platforms.
Trading Signals (Semi-Automated)
Forex trading signals are available on iOS, Android, and desktop platforms from the best firms. While some of these services are free, others require a monthly fee. In addition, certain brokers may use automated analysis, while others use a team of analysts to provide indications.
A high-quality signal service relies heavily on the contribution of the human aspect. Human beings will muddle together various economic indices and fundamental and technological factors.
Trading Robots (Fully Automated)
Signals are generated and responded to automatically by bots. Since they don’t need human interaction, they effectively function only on market data. As a result, investing in forex is no longer influenced by human emotions.
On the other hand, the accuracy of Forex trading robots is not constant. Furthermore, robots aren’t perfect, so you will have to watch and alter their programming. Even the most profitable programs need occasional maintenance.
MT4 and MT5 Experts Advisors (Fully Automated)
For automated forex trading solutions, MetaTrader 4 (MT4) and 5 (MT5) are MetaQuotes’ most popular automated forex trading solutions, known as Expert Advisors (EAs).
Automated forex trading is possible thanks to the use of Expert Advisors. These applications are written in a C++-like language by programmers. EAs watch the forex market and look for trading opportunities based on the parameters given by the user.
Final Verdict: Should You with Automated Forex Trading?
Forex trading robots, signals, and other technological solutions are many. Reviewing trading software and free trial accounts is a must for novice investors.
Further reading: The Pros and Cons of Forex Trading