A lot of people use online forex brokers, though a growing contingent of people don’t have the time to manually input their daily trades into these same trading systems. There are now, however, programs that completely automate the process for them.
Automated foreign currency trading?
Automated currency trading generally refers to computer programs that facilitate trades, eliminating the need for people to manually input their trades. These computer programs essentially conduct trades based on specified algorithms or analyses, which helps traders figure out strategies for their trading activities.
The computer programs used in automated currency trading help traders make decisions through signals produced from their intrinsic technical analysis charting tools. These tools essentially help them make buying and/or selling decisions when said commodities move in projected directions.
The automated nature of automated currency trading programs help traders who aren’t well versed in following the forex trading market. Novice traders also benefit from using automated currency trading programs too. Not every trader will find a surefire strategy that works exactly as planned—though if you keep reading, you may find our tips might help you find one.
Tips for creating an automated currency trading strategy
The best way to formulate a strategy for automated forex trading is breaking said strategy into simple to understand steps. As an example, a noted DailyFX strategy uses the DEAL approach. The acronym is broken down into description, entry/exit signals, application and leverage.
- Description helps traders identify the type of market conditions said strategy might hold significant advantages.
- Entry/exit signals more or less involve determining when to get into a position—and when to get out of it.
- Application works in conjunction with description, describing the process of finding a market that exhibits a certain characteristic and/or trend. Trends or ranges more or less rise and make progress (trending) or remain stagnant or display a significant lack of progress (non-trending).
- Leverage, in the context of forex trading, describes the process of borrowing an increased volume of capital when using a smaller amount for the purpose of investing and magnifying potential gains. Although leverage is aimed at maximizing, it’s always recommended to use a sufficient and ultimately conservative amount of leverage.
Traders using automated forex trading software have to teach the program how to search and interpret different market-related signals and how to interpret those same signals. It’s said that this process takes out the human psychology out of forex trading. Most automated trading systems are available for purchase on the Internet.