To seek self-preservation and avoid disappointment, you take extra care of something that seems too good to be true. Given that, discussions around automated trading software can sometimes start to sound a little problematic.
An automated trading system, after all, is based on algorithm trading. It is relied on knowledgeable program coding to execute both sell and buy orders for the sole objective of making a profit in the market. They are used for various assets. For instance, forex auto trading software is used for foreign currency exchange.
Let’s see what an automated trading system is and how true, such software turns out to be.
What is Automated Trading Software?
Designed to minimize trader involvement, automated trading software automatically determines when to execute the trade. It also then executed the real trade on the basis of preset entry and exit points. Everything is done automatically, as the name suggests. However, some level of involvement is there from a coder or trader. The indicators, instructions, and conditions are required to be coded into the algorithm. The trading strategy of the specific trader will decide the instructions along with the level of sophistication and simplicity in the trading instructions.
The three important things that contributed to the popularity of automated trading are:
- Allows simultaneous access to various markets
- Removes human’s liability to make an error in trading by automating it as per specific conditions or indicators
- Allows anyone to engage in trading (access to a computer and high-speed internet is a must)
Auto Trading System in Forex
Forex auto trading software is one of the most popular, widely used, and regular in the market for trading. Pre-coded forex trading software will analyze various markets and currency prices to recognize and seek advantage of price discrepancies, fluctuations, patterns, and anticipated movements based on political news.
In short, traders can still determine what market orders they want to execute when they want them to be executed, and the auto trading system will handle the rest. Commonly, it is referred to as foreign exchange automated trading.
Types of Foreign Exchange Auto Trading System
The two types of foreign exchange auto trading systems are:
Automated Trading Robots
This forex automated trading system conducts the process automatically, from signal recognition to trade execution. Trading strategies are still a vital and integral component as they will determine how an algorithm is coded or programmed to take action. If once it is set up, everything else, including sell and stops orders, will be carried out without any necessary intervention from the trader.
Automated Trading Advisors
It doesn’t execute trades. With it, the trader or broker still needs to place various orders in the market. Instead, it offers trading signals on the basis of the parameter coded into it. Still, you have the chance to refrain from trade execution. Thus, automated trading advisors preserve the ‘human element’ to the trade.
Though helpful and invaluable in benefitting from the market movements, the forex auto trading system doesn’t guarantee 100% trading success. This is because most trading robots operate within a specific and defined range. But, still, it helps in human error-free trading and helps you to trade conveniently.