Automated Forex Trading, also known as algorithmic trading, is conducted with the help of Expert Advisors (or EA’s).
Expert Advisor is a program designed for full or partial automation of trading processes. The level of automation can vary from assisting a trader in making decisions to offline placing and canceling orders. Automated software can also perform additional functions such as control of orders placed, trade monitoring, and analysis of the market conditions like volatility and liquidity. This type of trading routine is called auto trading.
Expert Advisor software is written in MQL4/MQL5 and is designed to interact with MetaTrader 4/ MetaTrader 5. It is also possible to add trading bots to the TickTrader platform. EAs respond to the price action to send trade entry and exit orders to the market for execution.
How does automated trading software work?
Auto trading technologies are mainly used for technical analysis. Let’s consider a basic example. A trader codes or purchases an automated trading program for cryptocurrency exchanges that buys one currency against another under a specific condition — when the shorter-term MA (moving average) crosses above the longer-term MA. Also, the trader can instruct the program to sell a certain currency when the price reaches a specified level.
After setting the input data, the program should work without human intervention.
Who can use automated Forex trading software?
Automated expert advisor services are now available to any Forex trader. Initially, the advantages of auto trading were exploited by institutional and professional traders to navigate highly liquid Forex markets. Right now, robot trading is also available to the retail segment, including crypto traders.
What are the advantages of automated trading?
Unlike humans, expert advisors are not influenced by emotions. Decision-making is based entirely on calculations, which makes trading more efficient.
A well-developed and optimized automated system for trading helps you to facilitate some calculations and increase the probability of profitable trades.
Automated trading systems can monitor and trade multiple trading instruments simultaneously 24 hours a day.
You can adjust the EA settings or revert to manual trading at any time.
You can also use auto trading to copy trades of successful traders. Therefore, there is no need to analyze market conditions by yourself.
What to be aware of while using automated trading?
It is impossible to completely exclude control over transactions, due to possible communication issues, power outages, and other technical problems.
An EA that can replicate the full scope of analytic capabilities and flexibility of a human trader is yet to be found.