Get Started -Forex Automatic Trading FAQ

Introduction to Automated Forex Trading

Automated Trading is witnessing a tremendous growth nowadays as it is used by all types of traders: professionals, advanced and beginners. Automated trading is a method of trading Forex currencies using specialized software. This software is called an Expert Advisor (E.A.) and it is a set of programmed analysis and techniques including indicators, special filters and rules. Whenever all these tools agree upon forecasting the direction of a trend, a trading signal is generated and executed automatically. Signals may be either bullish or bearish aiming to trade any market direction. When we refer to an automated trading system we refer to the way that trading orders are actually executed. An automated trading system must be able to execute trades without human intervention by placing at the same time a target-profit and a stop-loss order.

Systems that are using automated trading analysis but involve manual execution can not be considered as automated trading systems. There are several types of trading systems that allow automatic order execution.

Different Types of Automated Forex Trading Systems

In general we may distinguish automated trading into semi-automatic trading and full-automatic trading systems. A semi-automatic system is able to execute automated orders while it is continuously re-adjusted by a human programmer / analyst. This is happening in order the system to fit the special conditions of any given market. For example in a day when the market is ranging with low volatility and limited liquidity, the controller reduces the risk ratio and the system becomes more risk-averse selecting only high-probable trades. From the other hand, a full automated system excludes any human intervention. In this category we can find many Forex Robots.

How an Expert Advisor Operates

Automated Trading Systems are designed to trade any Forex account automatically. These systems are able to manage any trading operation by sending and executing trades directly to your broker’s server. Trades are placed accompanied by a stop-loss and a target-profit price, while they can automatically re-adjust the target and the stop-loss at anytime. 

The Advantages of an Automated Trading System

Theoretically, the great advantage of an automated trading system is that it is able to exclude human psychology out of the game (trading). The emotional character of our human nature is highly disturbing our decision making process when we trade in any financial market. Fear, hyper-optimism and other similar feelings deriving from our emotional brain are working against logic and finally against the odds of winning. Our emotional brain is the worst trader there is.

Furthermore, the classic type of trading has limitations regarding the stamina of our human nature. Automated Trading never gets tired. Using a VPS hosting service you can even turn-off your PC and continue to trade 24hours per day.

» Forex Hoster (MT4 VPS Hosting) -Costs $89.95/month 

The Disadvantage of a Full-Automated Trading System

The disadvantage of any full-automated trading system is that it can deal only the market conditions that it is programmed to deal with. That means that new market conditions deriving from major fundamental changes can not be interpreted and incorporated by a full-automated system. A major event, such is a country’s default to meet its payments, usually leads to extreme volatility in the market, and extreme volatility can change everything. Semi-automatic systems may adapt better to new market conditions, as they can be re-adjusted anytime.

» Forex Signals | » Fx Robots


Evaluate the Past Performance of any Automated System & General Recommendations

Automated trading systems as any other trading system are evaluated based on their past performance. Here are some key points and recommendations:

1. Focus on Winning Pips and not on Winning Ratio.

Some trading systems (especially robots) are designed to trade with a wide stop-loss and a narrow target-profit. That means that they win most of the times but when they loose, they loose hard. Avoid these systems, risk / award ratio must be at least 1:1.

2. Avoid Systems promising to make you rich in a couple of weeks.

You shouldn’t believe any provider that is promising more than 40%-100% per year.

3. Do not to take anything for granted

Double check any information regarding the past performance of any given system.

4. Use a Trial Period

Most providers offer nowadays a trial period, it usually costs $5 for a period of 3-7 days trial. Take advantage of any trial period, it can save you time and money.

The Importance of the Right Settings

Given that you have chosen the right provider, another important issue is to enter the right settings into the system. That is especially important in the case of Forex Robots which are fully-automated systems. Read the manual very carefully and take the advice of other traders who have already used the system. If you are beginner, you may also attend a specialized course.

» The MT4 Forex Robot Optimization Course -Costs $87

Scalping and the Role of Technology

Technology matters especially as concerns short-term trading and Forex scalping. Scalping is a trading strategy targeting profits of 4-10 pips while tens of trades may be executed in a few minutes. These types of scalping strategies are usually incurred in Forex Robots. If you trade from your own PC keep in mind that the speed of execution is absolutely crucial when you use automated Forex systems.

Forex Scalping Robots Reviews at Forex Automatic:

» Megadroid Review | » GPS Robot Review | » MillionDollar Review | » FAP Turbo Review

How an Expert-Advisor is Programmed?

Experts Advisor are programmed in special languages according to the trading platform that they will be used. For example, if the platform is the popular MT4 then the language is MQL4 (MetaQuotes) and if the platform is MetaTrader5 then the language is MQL5.

More: » MQL-4 » MQL5

The Importance of Choosing the Right Forex Broker

If you decide to implement a short-term automated trading strategy (for example scalping) you should choose a Forex broker very carefully. Some Forex brokers even forbid scalping, so be extra careful with that. Let’s see some factors determining the ideal Forex Broker for short-term trading:

1. Tight Spreads

Tight spreads are absolutely crucial in order to trade Forex in the short-term. When your target profit is just 4 pips the difference between a spread of 0.5 pip and a spread of 2.5 pips is really huge.

2. Fast Execution

High execution delay can catastrophically disturb short-term trading. That is why you should be after only No-Dealing Desk Brokers. A NDD broker is either an ECN or a STP broker.

3. Latency of Servers

When the servers of a Forex broker are situated in the same data center as its liquidity provider, then execution delays are minimized and traders get the best fills. Professional arbitrage systems give extra weight in such details.

Compare: » Forex Brokers | » PAMM Accounts


The most popular platform to trade Forex automatically is the MetaTrader4 which provides a huge variety of different tools, indicators and Expert Advisors (EA): MetaTrader4 Review | ►MetaTrader5 Review 

Compare Forex SignalsCompare Fx Robots | » Compare Platforms 



Get Started -Forex Automatic Trading FAQ


Read More: ► Forex Heat Map | ► Basic Trading Tips | ► Money Management | ► Forex Scalping Guide

You are here: Home Fx Tips Get Started