What's All the Fuss about Automated Trading Systems?

by Andrew McGuinness     Apr 06, 2018

If you're just getting started in Forex trading, an automated trading system can be your saving grace...or at least save you from losing all of your hard-earned money on a single bad and risky transaction! An automated trading system, sometimes referred to as a mechanical trading system, follows a set of predetermined rules that allows your system to handle all the dirty work of trading when the conditions of your automated trading profile have been met. The basis for entry and exit can be predetermined, and can generally be based upon moving averages, daily oscillations, and technical indicators that more experienced traders or coders can inform you of before you make your first trade. It's best to use a combination of these factors when setting your entry and exit conditions. For example, you can set your automated system to buy a certain currency if the 20 period moving average crosses over a 50 period moving average and the technical indicator is lower than 20. Once you have coded your specifications into your system, it will become fully automated; this means that you won't have to go through the process of monitoring market movements or making trades, as the Forex trading mechanical trading system will handle it for you.

The biggest benefit of an automated system? The ability to remove human emotion from the Forex trading equation. Even in the most experienced Forex trading investors who have been in the market for decades, emotions can cause anyone to sell or buy a currency even when their logical senses are telling them that is isn't the right time or the most profitable move. The sad truth is that many investors, especially those just getting started in Forex trading, never realize their true trading potential because they allow their emotions to get in the way and allow them to stray from the path of rational trading. Fear and greed are the two emotions that largely run the Forex trading arena, but with an automated trading system, you can test out your trading rules on a purely mechanical and technical basis.

As you can see, Forex trading using an automated system can be great for those who are still working out their place in the market, who are looking to test a few strategies, and those who often times find themselves overwhelmed with emotion during their trading ventures. If you're looking to get your hands on your own customizable automated trading system, there are a few ways that you can go about doing so. If you have experience or a background in computer programming, you can probably create one yourself using online tutorials available on YouTube or Vimeo. You can hire a professional programmer to create a system for you, or you can purchase a pre-made trading system. However, both of the latter options come along with their own set of challenges. How do you find a programmer who is reliable, or a trading system that can live up to the claims it makes? They key is doing your research. Asking for referrals from your trusted partners, reading reviews, and even better, getting the Forex trading education that you need to be able to distinguish the best trading patterns, can get you started on the road to finding the most effective automated trading system for your needs.

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