The Benefits of Automated Trading

Automated forex trading is a relatively new concept that is rapidly growing in popularity among retail forex traders. As you are aware there are really only 4 ways to go about trading in the forex market, self directed trading, trade signals, managed accounts and automated trading. The largest benefit of automated trading is that it alleviates the downside and combines the benefits of the other forms of trading.

Most self directed traders experience two big pitfalls when trading, emotions and poor money management. Emotions are usually the demise for most self directed traders; fear and greed are the two that usually stand in the way of success. Traders usually exit trades two early because of fear or stay in trades two long because of greed. Using an automated system solves this problem because all trades are executed automatically with enter and exit points programmed into the system. Along with the emotional aspect of self directed trading, time management is usually another pitfall. Using an automated system can also alleviate this problem, for American traders who want to trade the European session that requires being up in the middle of the night, with an automated system in place, your trades are executed while you sleep.

Automated Forex trading systems are used to buy and sell on the Forex markets any time of the day; that means that you can still enjoy optimal Forex trading and get on with the rest of your life.

Automated Forex systems (expert advisors) work according to your trading instructions. On your own, or with the help of a trading mentor, you set the parameters of your Forex trading program and instruct the system to move accordingly. The rules that you use to program your system, your trading instructions are signals to exact points of entry and exit into markets.

A number of parameters can be set within your automated Forex trading system. You can define price patterns, market trends (such as fading or counter trends, following trends, or breakout trends), price points, averages, technical indicators, price level proximity and such as your rules for trading. The system will then use the parameters to create an algorithm that will work automatically on your behalf-any time of the day or night, any day of the year in any market the world over.

Another way to trade is with trade signals and managed accounts. The problem with both of these is that trade signals are not always reliable and often require a trader to place trades trusting a signal provider as opposed to their personal judgment. Managed accounts are another popular form to invest in the forex market, however as many people will attest, managed account providers usually make their compensation through the spread so generally it is not a vested interest of theirs to make a client a return since they are being paid on trade volume.

There are several automated forex trading systems available in the market. There are also automated Forex systems that are offered for free or as part of their trading account acquired from their Forex brokers. There are two types of automated Forex trading system. These are discussed in the following.

Desktop-based systems, all Forex related data are stored on your desktop's hard drive. This system is unpopular to Forex traders because all data are susceptible to computer virus contamination and other security problems. Worse, when the computer malfunctions, all essential information might be lost and cannot be retrieved, unless you have some back-up files of your own. However, it is little expensive compared to the other types of automated trading system.

Web-based systems the security of your Forex account and other data are provided by your web-based provider. These are hosted on secured servers. It is also convenient in the sense that there will be no software required and it is universally compatible with your Internet browser.

You can also try different automated trading system demos first so that you will be able to determine the automated Forex trading system that suits your personal preference and needs. Some traders open a micro account to test systems in a live environment, trading micros helps because pips are equivalent to 10 cents so the cost of learning or testing is minor. Even if you are just a small-time Forex player, it will be to your advantage if you use an automated Forex trading system for your future trades so you do not over leverage yourself on self trades. Most automated platforms allow traders to place micro, mini or standard lot trades.

Most automated systems (expert advisors) are programmed on the Metatrader4 platform and are written in the MQL4 Language. This is a challenging concept for most people so many brokers have started to offer their own platforms with automated systems already programmed. The automated platform is available to the trader like a normal platform; however you can build and structure a portfolio around the various systems that are provided.

The alternative to this is opening a Metatrader 4 account and purchasing someone else's EA that they have programmed themselves. The amounts of Systems are growing rapidly as people realize the potential of this strategy.

By now, no doubt you've noticed a theme; automated Forex Trading Systems manage your currency trading portfolio all the time. They trade exactly as you would if you were able to do nothing else but sit by your computer and manage trades all day and night long, all week and year long. With a good automated Forex system, there is no worry that you will miss an important investment opportunity or bail-out point overnight or while at work; and there are no hounding phone calls at inopportune times from your broker who requires immediate instruction. This is the most crucial advantage of Forex trading with automated Forex trading systems, and the best reason to use one.

Automated Forex systems allow you to carefully examine your own trading style ahead of time and design the system that works the best for you. You can tailor your trading to your own risk tolerance levels, which are inputted into your system. In so doing, the responsibility for making pressured decisions on-the-spot in an ever changing market is removed. Automated Forex systems take the stress and emotion out of currency trading decisions. Guesswork and room for interpretation are eliminated; fear and greed are eliminated; reliable, predictable progress is what remains; in the end, all you see is the results.

To sum it up, an automated Forex trading system take the least advantageous elements of the human side of trading out of the process, and replaces it with reliable, precise currency trading instruction. In a currency market that is always evolving, the only way to maximize results is to let this modern technology work for you.

Alexander Nekritin is a professional trader with over 8 years of experience. His specialties include risk management and system development. Alexander is the CEO of NCMFX, Inc., which is a forex introducing broker and an educational company that helps suit clients' needs in forex trading.

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