Automated Forex Trading Software

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Automated Forex trading software has become extremely popular these days. One reason for its growing popularity is the increasing number of short-term traders. Short-term traders love the set-it-and-forget-it nature of trading using this type of software.

So what is “automated forex trading software”? Automated forex trading software is software desgin to trade the Forex market in a hands-free fashion. This simply means that no action is needed on the part of the trader. Sounds like a dream come true doesn’t it? Well, yes and no. Let’s dig a little deeper into the pros and cons of trading using this type of software.

Pros –

1 – Trades without trader intervention. Can trade for you while you are plauing golf or on vacation
2 – Can react faster than a human can react. Software can take action faster than a human can.
3 – Can minimize frivolous trading. Trading software will trade in an unemotional fashion. It will do what is told to do when it it told to do it. This can be a big advantage for traders who have challenges exercising good trading discipline.

Cons –

1 – Typically has its logic hidden. This means that the user has no idea what makes the system tick. Any trading software with hidden logic is referred to as a “black box” system. If you don’t know the underlying logic of an automated system how can you tell if it is working as it should be working?
2 – Doesn’t encourage learning Forex trading and individual analysis. Automated software can actually make you a lazy trader. The exception to this is if you do your own research to create your own automated systems.
3 – Most commercially available Forex trading systems do not work. This is about the biggest “con” you can possibly think of. The good news is that you don’t have to rely upon someone else’s expertise (or lack thereof) to trade Forex successfully.

If I were to ask new traders what they think of automated software they would all tell me that its the greatest thing since sliced bread. If I were to ask those same traders if they were making money with their software it is likely most of them would tell me no. Why is that? One reason is that automation sounds sexy. If you tell a friend that you have your own personal “Forex trading robot” trading for you it is likely your friend will be impressed. It is almost as if automated trading carries a certain level of status with it.

So is automated Forex trading software good or bad? Neither. You see what really matters is if the trading system inside the software works or not. If the system does not work then we are only automatically manufacturing losing trades. Quite obviously, that is not our objective. In most types of trading automation isn’t really a necessity. If you do happen to venture into automated trading make certain you understand how the trading system works. It is also a good idea to trade the same system manually and compare results. This way you can ensure that the automation is executing trades as it should.

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3 Disadvantages of Using a Forex Robots for Automated Trading

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Even though automated trading using Forex robots has become extremely popular, using them still has certain disadvantages. Let’s explore some of those disadvantages in further detail.

The logic is hidden — Having hidden logic is a definite disadvantage. A trading system which has hidden logic is known as a “black box” system. This simply means that the expert advisor takes in real time Forex data, processes the information using its internal formulas, generates a signal and then trades that signal.

The biggest challenge when using a black box system is that you don’t know if it is working as it should or not. What we mean by that is you can’t tell if it is doing what it is supposed to do if the logic of the system is hidden. What can happen is that the system will continue to trade for you even if the premise upon which the system is based is no longer working.

Most robots simply do not work — Quite naturally, this is the biggest disadvantage. It is unfortunate that most robots are ill-conceived. One reason for this is that it is relatively easy to sell Forex trading software because there are so many people looking to buy. On the flip side is very difficult to create an expert advisor that will work for the long term. Creating a Forex strategy takes a level of skill that most robots creators simply do not have.

They make you lazy — Any time you believe that you can spend $97-$197 for product that will manufacture money for you, you are starting off on the wrong foot. As the old saying goes, “there is no such thing as a free lunch”. This is especially true in the world of Forex trading where we as traders pay for every mistake that we make.

If you buy automated Forex trading software you are essentially telling yourself that you believe that you can make money in the markets without any effort on your part. This “get rich quick and easy” mentality has meant the demise of many a would-be trader. If you’re not willing to put in the work, then how can you realistically expect to be successful? The short answer is you can’t and you shouldn’t. Believe me, if there is some super shortcut or great robot out there I’d be more than happy to share that with you. So far I haven’t found.

So after looking at these disadvantages what is the moral of the story? The moral of the story is that you should work to learn to trade Forex and create your own trading methods and trading style. In the meantime make certain that you avoid any “too good to be true” Forex products currently available in the marketplace.

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Is Automated Forex Trading the Best Way to Profit in the Forex Market?

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With all the commercially available automated Forex trading systems on the market today it’s not surprising that most beginning Forex traders believe that this is the only way to trade. There are a number of ways to successfully trade Forex and using automated Forex trading software, commonly called Forex robots has taken off in its popularity.

Automated Forex trading is an excellent way to profit in the Forex market. The trick is to select a Forex robot that can actually make you money. Far too many beginning Forex traders become fascinated with the automated component of a trading system. After all, having a Forex robot work continually night and day to multiply your money is something that every Forex trader would be quite happy with. Let’s take a look at a few of the differences between automated Forex trading and manual Forex trade.

Manual Forex trading — the trading signals for manual Forex trading can be generated either at the discretion of the trader or by Forex signal software. They discretionary trader can manually scan for certain types of setups and then pull the trigger when they feel the time is right.

Manual Forex trading signals can also be created by a wide variety of Forex signal software also known as Forex trading system software. The software takes Forex data and then runs its calculations on that data. The calculations it runs will ban produce a Forex signal. The trader will then take that Forex signal and manually place their orders using their Forex platform.

Automated Forex trading — automated Forex trading is completely hands free. Automated Forex trading software will not only generate Forex trading signals, it will also act on those signals can place your trades for you. This type of trading in general appeals to a great number of people because of the increased sense of freedom that it gives them. You don’t have to be in front of the screen or near a telephone or even near your computer in order for this to work properly.

A new trend that started in automated Forex trading and that is using a Forex VPS. VPS stands for virtual Private server. This is a computer server which is housed in a remote location. The server actually runs your Forex trading software for you 24 hours a day seven days a week. One of the main benefits of using a Forex VPS is that even if your Internet connection goes down and your computer crashes your Forex robot will still be able to continue to place your trades automatically. Now that, is truly completely automated Forex trading.

Both manual Forex trading and automated Forex trading can be extremely profitable. Automated trading becomes a lot more useful when using short-term trading systems such as Forex day trading systems. With longer-term Forex systems you can typically place your entry and exit orders and walk away. For those wishing to catch the big moves in the Forex market manual Forex trading would work just fine.

We automated Forex trading as with all Forex trading traders must do their due diligence to feel comfortable that the trading system being used will be able to show a profit in the future. It is also extremely important to remember that you should test your automated Forex trading system using a demo account prior to using real money in actual account. This will allow you to see firsthand if the system is performing as it is supposed to perform and allow you to work any kinks out if there are any. Once you are comfortable your system is doing everything it is supposed to do you can then use it in a real money account.

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What Are The Different Types Of Forex Trading Software?

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There are number of different types of Forex trading software. Trading software can do anything from help you design your own trading system to automatically place your trades for you.

Here’s a brief outline of the different types of trading software and what they are used for:

Forex trading platform — Your trading platform is the interface between you and your broker. Trading platform software is what makes online Forex trading possible.  Forex trading platform software is downloaded from your Forex broker’s website for you to install on your computer.  Once your account is open and funded you will be able to place trades directly from your computer.  This is one of the greatest things about Forex trading as you can trade from anywhere in the world that has a reliable Internet connection.

Forex system development software — System development software is used by traders wishing to develop their own Forex trading systems.  Development software allows a trader to test their trading ideas by using historical data.  This process is called back testing and is very useful for seeing how a particular trading idea might have performed in the past.

Forex robots– A Forex robots already has a Forex trading system programmed inside of it. It is called a robot because it automatically generates Forex signals for the trader without human intervention. When interfaced with a compatible Forex trading platform a Forex robot can place trades automatically.  This is the ultimate in Forex trading automation.  Keep in mind that before you attempt to allow a Forex robot to trade for you automatically you should thoroughly test and observe it in a demo account without having any real money at risk.  Once you are absolutely confident that it performs as it should then you can have it trade in your live funded account.

Forex system software — Forex system software is similar to a Forex robot in that it generates Forex signals for the trader. The software can be used standalone and generates signals which the trader can then manually place using their Forex trading platform.

As you can see Forex trading software can definitely make life more convenient for the Forex trader. In the case of Forex robots and Forex system software, make certain that you investigate them thoroughly before your purchase.  It is this type of trading software that can mean the difference between success and failure in Forex trading.

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