Automated FOREX trading is exactly what it sounds like. It’s an automated approach to FOREX trading. The system is algorithm-based and is a hands-off approach to trading where a specialized computer program acts as the trader and analyses price patterns, decides whether to buy or sell, and executes the trade. The only human intervention required here is the choosing and tweaking of trading algorithms according to preference.
Foreign currency trading or FOREX trading as it’s more commonly known has come a long way and is now a highly robust sector that’s flooded with cutting-edge tech to make things easier for traders. Nowadays, manual trading is extinct, and the highly liquid, high-speed world of Forex trading has moved on to algorithmic-based training. However, unlike before, automated FOREX trading isn’t only limited to institutional traders. Nowadays, retail traders have access to technology as well.
We here at the Zed Network work with FOREX and Fintech companies from all over the world. Because of our close ties to the sector, we know all there is to know about the FOREX trading world, and we thought we should let you know all there is to know about automated FOREX trading. In the following, you will find some important things about the technology, and hopefully, it will give you some clarity on how it can help you and your business. So without further delay, let’s check it out!
Breaking Down Automated FOREX Trading
When you hear algorithms and tech, you might think it’s a highly complex aspect of the industry. Even though highly complex technology is involved, it primarily uses technical analysis, which is even valid for trading cryptocurrency. If you are still finding it a bit confusing, then let us break it down for you.
A simple example for automated FOREX trading is when a trader codes a program to buy a specific currency against another when a shorter-term moving average moves above a longer-term MA. The program will also have instructions on selling the currency it bought once its price gains a certain amount of pips. As you can see, it’s a simple idea where a computer program buys and sell currency without needing human intervention at every step.
Now you may be thinking that your specialty is FOREX trading, and you know nothing about computer programming. But not to worry, there are plenty of trading platforms where you will be able to create your own automated trader based on technical analysis. However, if you are a budding operation in foreign currency exchange and trading and you need to make your very own automated FOREX trading solution, then you can talk to your tech team or work with a development team.
There are plenty of free resources out there to help you and your team create and integrate a highly powerful automated trading feature into your business. While there are plenty of different programming languages out there that you can use to create an automated system, MQL4, EasyLanguage, Python, and R are the most popular programming languages for building automated Forex trading systems. So talk to your tech team and be on your way to creating your very own automated trading system.
What’s The Viability Of Automated FOREX Trading?
Automated FOREX trading works. As we mentioned earlier, the industry adoption came years ago but is just now available for retailers. However, it’s an established technology that has been present in the foreign exchange world for quite some time now. Whether you are a retail FOREX trader or a FOREX trading platform, you will need to integrate automated FOREX trading systems to survive in the current market. Its track record should speak for itself.
Automated FOREX trading is considered one of the most valuable innovations for FOREX trading and has helped countless businesses and individuals make a living. If you want to integrate a new automated system, then an excellent place to start will be to automate trading strategies people would otherwise use manually.
Remember, if you can represent something through the scripting language, then you can automate it. So make sure you talk to your tech team about what your automated FOREX trading system will offer to your clients. As we said, you don’t have to be an expert in utilizing the power of automated FOREX trading systems. There are plenty of communities like the MQL community, support virtual marketplaces, where you can discuss, order, and buy ready-made or customized automated traders as well.
Things You Need To Know About Automated FOREX Trading Software
Automation is not a single process. There are different types of automation, and it’s the same for Automated FOREX trading. According to Zed Founder and entrepreneur Alan Safahi, you have three different options for automation. The fully operated Automated systems will be able to derive, decipher, and assess trading signals. After that, they execute the trades. This sort of automation is also known as trading robots. The only human intervention it will need is through settings concerning lot size, take profits, stop losses, and various other risk-managing parameters.
There are also signal generators that are used to derive trading signals from technical analysis. A trading signal is based on several factors like the entry/exit price, TP/SL, timing, and other parameters. Once the Automated trading feature produces a trading signal, the trader then has to execute trades according to the trade signal manually.
The idea of copy trading is simple. It’s a feature that lets you find experienced traders and lets you copy their trades. Most FOREX trading platforms will have this process automated. Here the user will simply need to choose a trader, sets the system to “follow” or “copy.” Then the profile will automatically execute the trades of the copied trader until it is manually stopped.
Broker-based Automated Trading Platforms
When it comes to broker-based automated trading platforms, different Forex/CFD brokers support different trading platforms. You are bound to find some form of automation from modern-day platforms, so you don’t have to worry. Here are some of the best-known and most popular platforms you can look at if you are a retail FOREX trader:
- MetaTrader 4 (MT4)
- MetaTrader 5 (MT5)
- eToro Copytrader.
- Ninjatrader 8.
Now, it is important to remember that some brokers may have proprietary trading platforms that might not offer automated Forex trading. However, the industry standard for brokers is to have a FOREX trading platform. The platforms we listed, however, do provide a wide range of automation-related features. If you want a platform that includes everything from social trading to trading robots and massive community support, then you can check out MT4 and MT5.
These platforms usually have all the automated FOREX trading features any trader will need. If you are strictly into FOREX, we recommend you stay away from ProOrder and eToro. ProOredr offers no social trading, and its programming language is BASIC-like. While eToro, on the other hand, does not provide algorithmic trading and trading robots.
Trading signals are a vital aspect of automated FOREX trading, and many platforms will offer you the service for free. However, some platforms charge a subscription fee to use the automated trading feature. There are even platforms out there with teams of experts churning out trading signals while many only rely on automated analysis. Regardless of the automation, however, the human element remains vital for success in the FOREX trading industry. Humans are the ones that mix the fundamentals with technical triggers and take into account various economic indicators.
We’ve already touched upon this feature of automated FOREX trading. These are computer programs that automatically generate trading signals and then act upon those signals without human intervention. Meaning you altogether remove the emotional aspect from your FOREX trading operation. However, you should air on the side of caution with robots. These are not infallible programs, and even the best-performing ones will need regular checking and some tweaking every now and then.
Why Is MT4 So Popular Amongst FOREX Traders?
Metatrader 4 is a FOREX and CFD trading platform and was created by MetaQuotes. It is by far one of the best platforms that offer a wide range of features when it comes to automated FOREX trading. It has everything from advanced charting features, technical indicators to other impressive functionalities and not to mention MT4 and MT5’s Expert Advisors feature, which is considered as the gold standard in automated Forex trading.
Expert Advisor is a fantastic feature that automatically monitors financial markets and identifies trading opportunities based on parameters set by each trader. So if you have a FOREX trading platform yourself, then creating a feature like Expert Advisor will go a long way into ensuring long-term success. One of the reasons why Expert Advisor is considered the gold standard in automated FOREX trading is its number of benefits it provides FOREX traders. Here are some of them, so you know what you will have to do:
- It saves time.
- Eliminates emotions from trading.
- A feature like EA can handle any market supported by the platform.
- Traders can have easy access to automated FOREX trading features.
Now, you should keep in mind that not all EAs are perfect there are plenty out there that are simplistic bits of code thrown together in a hurry. Another critical thing to remember is that, unless you have a VPS, your EA feature will only run when your computer is online. The final thing to remember is that automated FOREX trading features like EA can be fantastic tools. Still, they cannot measure up to the analytic capabilities and flexibility of an expert human mind. So when creating your own version of EA, keep these things in mind.
What You Need To Know About Free Automated Trading Software
While distrusting free software is considered common sense because of the general “too good to be true” promises they make. Still, with automated FOREX trading systems, the situation is a bit more nuanced. There is no guarantee that the paid software will outperform the free ones when it comes to automated trading software. However, paid software is the one where people usually put a bit more effort into and not just create a simplistic, haphazard piece of software.
So there’s precedence that paid automated trading software might be the better option for FOREX trading. According to Alan, expert Advisors work as a perfect example in this situation. While you may find free EAs that can work for your trading, there is no denying that there is a vibrant marketplace built around auto traders. That means if you want to grow sustainably, then you might need to invest in some paid automated FOREX trading software.
Automated Trading For Retail Traders
Automated trading is a blessing for brokers, foreign exchange trading platforms, and traders alike. However, we have seen many instances where retail foreign exchange traders make questionable decisions to optimize their automated FOREX trading capabilities. So here are a few optimization tips for retail FOREX traders:
- Know and understand manual FOREX trading before looking to optimize.
- Do not be complacent after automation. Even the best-automated Forex trader needs monitoring and occasional tweaking.
- Always use server-based trading platforms and automated traders. It minimizes the risk of mechanical failures drastically.
- Look out for scams. Remember, there is only so much automated Forex trading can do. It is mostly about you and your reading of the market.
Work With A Comprehensive Payment Orchestration Partner
So there you go, those are all the important things you needed to know about automated FOREX trading and everything it entails. If you are a FOREX broker or a currency trading platform, then the odds are you will need comprehensive payment orchestration solutions that will make your operations easier by simplifying the domestic and international payment aspects.
We here at Zed Network can offer you just that. Our market-leading payment orchestration solutions provide you the best value when it comes to bringing ease of payment and operational efficiency. Plus, our seamless integration process ensures you can run your firm without worrying about integrating one of the most cutting-edge FX-Trading payment orchestration solutions in the market.
So if you have any more questions regarding automated FOREX trading or payment orchestration, then please contact us or drop your comments below. Also, hit us up on our socials and send in your thoughts and suggestions on improving our service to you. Your feedback is invaluable to us, so please send them in. And with that being said, that’s about all we have for you today. We will come back with something new for you soon. Until then, see ya!