Why should you use automated trading? What benefits does it have over traditional Forex trading?
Manual trading can incur losses from time zone delays. Automated trading happens 24 hours a day without any lags due to the time zone you are trading from. In a particularly volatile market situation, any missed time can cost money. Trading can happen faster with less emotional input when it is scheduled in advance and you do not have to make the moment to moment decisions personally.
The biggest benefit of automated trading is that it takes the emotion and human psychology out of Forex trading. The biggest losses in Forex are usually due to pride, fear of failing and refusing to accept that one has lost or made a mistake. Automated trading eliminates all of these factors and then your trading decisions are based only on your strategy which is much more objective. Removing the emotion from Forex trading can be extremely beneficial especially to inexperienced or new traders. The rush from winning and the devastating feeling of loss can cause a trader to stray from the plan and make irrational decisions which are harmful financially.
Pay attention to key terms such as profit target, stop loss, range, momentum, and trends when reading the descriptions of the different strategies. The description of the strategy should also tell you what type of situations the strategy is meant for. Some strategies work better in one type of market and some work better in other markets so make sure you adopt a strategy that works in the market you want to enter.
Look at any strategy over a period of time, not one or two particular trades. When searching for an automated trading strategy you must look at the whole picture. How does this strategy perform over time? How has it worked for others in the long run?
How do I choose an automated trading platform?
When examining a candidate for a platform for your automated Forex trading, there are many important questions to ask.
Check for hidden costs. Check if there is a guarantee. Check if there is a demo version. Find out what customer service is provided. How often is the system updated and how will you receive those updates?
Make sure the platform you choose has short term and long term signals that you can set, realistic goals for you to adopt and achieve.
Once you download the platform you can test it to see how comfortable you are with it. Most Forex Robots come with a free trial period. Use it on a demo account and see how you feel about the results. Make sure your new platform is connected with a broker who offers you the spreads you are looking for, with commission rates and minimums you are comfortable with. The robot will only be the best for you if the brokerage is too.
If you are a more experienced trader, you might want to find an automated system that allows for customization.