The Advantages Of Automated Forex Trading Software

Can automated forex trading software trade efficiently in the forex markets? Is it really possible to let a machine make choices for you when trading foreign currencies?

The very fact that you have to think about it before you answer the question reveals one big advantage that a computer has over you. Of course the problem you have is your ability to doubt things.

Expert Advisors

Automated forex trading software works by using an expert advisor or EA. This is just a set of indicators that signal a trading opportunity if all conditions are met. They are written into a program script and packaged into some software. It is possible to do the actual analysis alone and you could reach the same result, that a trade is possible. The important point is what happens next.

The issue humans have is they can question the indicators and doubt their reliablity. Or you may just get some gut feeling and not open the trade. This is a future prediction after all. The advantage with the software is it does not hesitate.

Predictable Currency Pairs

Another big plus point is a computer does not get fed up with all the figures. It can basically sit before the monitor all day studying the charts and doing the technical analysis. Humans have a lot of difficulty doing this.

As most currency pairs behave in particular ways it's no problem to set a computer to check them. They either range or they trend. You only have to pinpoint the main characteristic of their behavior and combine them into an expert advisor. All the program does then is look out for these signals.

Money Management

But if it were so easy then most traders would make a profit and not lose money like most do. Whatever system you use it will never be correct every time. This is where proper money management comes into play.

By altering your risk to return ratio you can keep yourself in profit but have losing trades.

Say your rules gave you a gain of 150 pips for winners but minus 50 pips for losers. Basically you only have to win one from four trades and you wouldn't lose overall. This is obviously simplified but the message is your automated forex trading system does not have to be perfect.