What Advantages Does Automated Forex Trading Have Over Manual Trading And Other Features Of Automated Forex Trading?
Automated forex trading may offer a solution, but it is not as simple as it sounds. Many traders dream of a hands-free approach to trading that provides consistent profits on autopilot for free. The reality is different and involves using a Forex auto trader to assist in the trading process rather than as a stand-alone trading robot.
By some accounts, automated forex trading solutions account for more than two-thirds of all trading activity worldwide. Some attribute excessive volatility and flash crashes to them, as algorithms, without human intervention, chase identical trades. Since 100% automated trading is possible, many retail traders are rushing to purchase an automated forex trading robot or expert advisor (EA).
Despite their capabilities and increasing sophistication, traders should understand that automated trading solutions do not guarantee results or present a one-size-fits-all solution for long-term profitability. They are beneficial but costly, while superior ones remain closely guarded by the financial firms that own them. The retail market remains flooded with thousands of Forex trading robots, many of them free, that fail to deliver results.
Some may work for a limited time and only long enough for the provider to earn affiliate commissions from their broker. Therefore, traders with a genuine interest in automated trading should conduct due diligence, identify their needs, and then look for a solution that delivers. That is why we at Noticias Diarias 24believe that learning how to trade with a trading robot and how to use it effectively will make the difference between profit and loss.
Explanation of automated forex trading
Automated forex trading continues to grow exponentially, then social trading, and investors should not confuse the two activities. Due to their popularity, shrewd marketing departments disseminate a lot of false information about forex trading robots and EAs.
Although there are complex technologies to address automated trading created with machine learning (ML) and artificial intelligence (AI) components, the majority of the solutions are in fact straightforward and do not require the use of the aforementioned technologies at their core.
The product is wrapped in a futuristic, user-friendly design to mask its lack of sophistication. The marketing teams weave an excellent and intriguing story that connects with retail traders looking to earn from Forex trading on autopilot, preferably for free or for a small one-time purchase price.
One of the most widely deployed strategies is the crossover of moving averages. The shorter the periods of moving averages, the more trades the automated forex trading robot will execute. Signal reliability and profitability will decrease as trading volumes soar, generating profits for the developer if granted in partnership with a broker for a reduced price or even for free.
They typically do not result in long-term success because of this. Another thing to bear in mind is that the potential for profit decreases with price. Before they are ready to operate in the financial markets, automated trading solutions that perform as intended take years of development and can cost tens of millions of dollars.
The Difference Between Automated and Manual Trading
Manual trading is 100% dependent on the trader, who must perform all aspects while physically present in front of his trading desk. It requires long hours and repetitive tasks in a high stress environment, where most allow emotions to drive trading decisions. Most retail traders have full-time jobs and careers to attend to, allowing them to trade at the worst times and be absent during peak returns.
Alert algorithms carry out the analysis process, and the most sophisticated ones deploy state-of-the-art AI components that can read the news and adjust trading strategies. Traders can receive price alerts for trade confirmation or under full automation while away from their trading desks. Automated forex trading provides full cross-asset diversification without the need to employ a team of analysts. An intelligent update can analyze tens of thousands of assets in microseconds, depending on the underlying technology infrastructure.
While most retail traders do not have access to sophisticated automated trading solutions powered by ML/AI, numerous competing options allow traders to gain an advantage. Those who prefer a 100% free approach will find a better option with social trading platforms. Retail traders looking for an edge should look for EAs that will work alongside them and help them identify trading signals based on their strategy. This will eliminate repetitive analysis and emotion-based trading decisions, keeping the final decision in human hands. Another option is an EA that monitors existing trades and adjusts profit and loss levels after a manual trade.
Does Automated Trading Work and is it Profitable?
Automated forex trading works, as evidenced by its use among financial institutions and the expansion of investment in sophisticated solutions. For anyone who makes a living from trading, whether professional or private, automated trading, partial or total, remains a requirement in today’s markets.
The MT4 platform offers the ability to back-test, allowing traders to gather sufficient data during the limited free trial version. Programming your strategy is still a good option, but many are failing to do so. The MT4 marketplace has over 15,000 EAs, which is why retail investors are likely to get what they need. I recommend taking your time to research and test before committing to a purchase.
Automated trading works and can be profitable.
Automated Forex Software: Find the Best Platform of 2023
Investors must decide which automated forex trading software is well suited to their needs, as there are several options available in the market. There are fully standalone, semi-autonomous, copy trading and signal providers.
- Copy Trading allows traders to copy others. Setup remains simple, and platform providers offer tools to safeguard, protect and alert traders. It is a low-cost alternative to automated trading.
- Broker-based Automated Trading Platforms: Most brokers offer trading platforms that fully support automated trading. Traders can either code their strategy or purchase an existing solution.
- MT4: The MQL4 coding language allows developers to create expert advisors (EAs), and many brokers offer APIs that provide more advanced solutions to connect to MT4 for order placement and management.
- Trading Signals: There are many signal providers, and most brokers maintain a team of analysts. While some use simple automated trading solutions to obtain signals, the more established ones rely on human analysts for more accurate trading recommendations. Traders usually must execute trades manually.
- Robots: Most operate independently of a broker or trading platform and connect through an API.
- Free Automated Trading Software: There are thousands, but most, if not all, do not work. They only create steady income for the developers, and I recommend all traders avoid them.
- Automated Trading Apps: FinTech companies produce automated trading apps to meet the demands of retail traders who prefer to use their mobile devices.
Forex Robot Scams
Unfortunately, the automated forex trading scene continues to be plagued by Forex robot frauds. Using good judgment will prevent investors from falling for them. Scammers provide screenshots of manipulated accounts showing huge profits. No one would sell automated trading solutions that generate such results.
Traders should ask themselves why a Forex robot or EA is available for free or even for a few hundred dollars if it makes the developers unheard of returns per month. The answer is obvious.
Properly utilizing automated trading solutions is beneficial and necessary for committed traders, but asking for the impossible will always result in losses. Profit guarantees remain another red flag to avoid along with set-and-forget solutions, which remain well-known scammers’ marketing methods.
Use of Automated Trading
Next in this Noticias Diarias 24 article we present some items to follow to consciously use automated forex trading:
- Traders should comprehend manual trading and invest time in education and expertise before switching to automated trading.
- A forex algorithm or EA should always be tested on a practice account before being used on a real account.
- Avoid trading 100% autonomously and monitor the robot, modify settings when necessary and make sure you stay in control.
- Never mix automatic and manual trading in the same account.
- Using a VPS can improve trading results, and many brokers offer it.