What is Forex autotrading?
One of the most powerful in the Forex trading is the autotrading or the use of automatic trading systems. The advantages of this systems are huge, for example allows taking advantage of every opportunity in a market that operates 24 hours a day. In most cases these automatic systems can work without the without the intervention of the trader who only have to observe them regularly. In general the systems are based on proven trading techniques (based in technical indicators) designed by expert traders. The main advantages of Forex autotrading are as follows:
- Automatic execution of the best trading strategies.
- The possibility of trading without emotions of any kind.
- The possibility of trade 24 hours a day, 5 days a week.
- The possibility of opening and closing multiple positions without the intervention of the trader.
Of course there some disadvantages with the Forex autotrading. You need to remember that the financial markets have a volatile and changing behavior for which a strategy will not work all the time. For that reason an intelligent trader that use automatic systems must constantly monitor their systems and performance. When a system does not work for any reason (market conditions, system failure, others), the trader has to remove and replace it with another that works best in these conditions. If the trader does not remove an automatic system that does not work anymore could suffer great losses of money, even its whole account. The main disadvantages of the Forex autotrading systems are:
- These systems are no flexible (they cannot adapt to the changing market condition in most cases).
- These systems can only perform the strategies of its programming.
- Usually these systems only work under certain market conditions, depending of the trading strategy of its programming.
These disadvantages do not mean that the automatic trading systems do not work, that only mean that the trader must observe and control these systems all the time under any circumstance. The worst thing a trader can do is let these systems operate without control.
Types of Forex autotrading
There are several types of Forex autotrading depending of the trader needs and the styles of trading. Also the types of autotrading depend on how trading systems work, how orders are executed and the companies that provide the service. The main types of Forex autotrading are as follows:
1.)Forex autotrading based on Expert Advisors of Metatrader 4
As you probably know, Metatrader 4 is one of the most powerful and popular trading platform used in the Forex industry. Most of the Forex brokers use this application as one of its major platforms or even their only platform. Metatrader 4 besides having multiple indicators and tools for the trader, has the great advantage of using automated trading strategies called Expert Advisors or EA. These systems are programs created by a programming language called MQL4 which allows to implement any strategy based on technical analysis that the trader wants. In summary, the EA are programs designed to execute trades based on specific trading techniques. The Expert Advisors and the Metatrader 4 must be used in conjunction with a Forex broker. In fact, most of the Forex brokers that use Metatrader 4 allows the use of EA for Forex autotrading.
The following link gives a list of Forex broker that allow the use of expert advisors:
2.)Forex autotrading based on automated system platforms
Some Forex brokers and others related companies have platforms fully dedicated to trade with automatic systems mainly in Forex. These platforms use dozens of automatic systems based on trading strategies of all kinds, including swing trading, day trading, scalping and others. The trader only has to choose the strategies that best suit their needs, implement them and fund their account. After that, the system or systems selected by the trader will begin to trade according to the parameters set by the same trader (size of positions, number of open lots, stop loss, take profit, etc.). Generally, these companies offer a demo account so that the trader can test their services and the performance of the automated systems of trading. Furthermore, traders can verify all relevant information on each system, such as performance, trading style, parameters, instruments of trading and others. In this way, the trader can select those that are the best and more profitable.
The following is a list of the main platforms dedicated to automated systems:
|Autotrading Platform||Forex Broker||Platform review|
|Mirror Trader of YoutradeFX||YoutradeFX||Complete Review|
|Mirror Trader of AvaTrade||AvaTrade||Complete Review|
|Forexyard FX-Automate||Forexyard||Complete Review|
|Market Autotrader||Markets.com||Complete Review|
3.Forex Autotrading with Real Traders as Signal Providers
This option autotrading Forex has become increasingly popular because of its many advantages and can be quite profitable. The system basically allow automated execution of trading signals generated by human traders. These signals are processed through a website or company that acts as an intermediary.
This website connects both signal provider (professional trader) with the client (investor) so that each time the trader performs a trade, it is sent from his trading account a signal which indicates the currency pair (or other instrument), entry price, stop loss and take profit if any. The intermediary site takes this signal and sends it to the client that is subscribed to its service and to the signal provider(s). Depending on the company, the trading signals are sent directly to the client´s trading account with a Forex broker or to an specialized platform of the same company. In both cases, the trading signals generated by the signal providers are automatically executed with the investor´s money so this is a form of automated trading in which the trades are produced by real traders instead of autotrading software systems such as expert advisors.
List of companies that offer the autotrading service with real traders
4. Forex Autotrading through PAMM Managed Accounts of the Forex Brokers
A new form of investment that are offering the Forex brokers are the PAMM managed accounts through which the investor's money is managed by a skilled and experienced trader or Account Manager. In this case, the manager is a client of the broker who has an account with this company (a PAMM account) to administer the funds of other customers of the same company (investors) for a commission. Thus, the manager aims to obtain benefits and compensation for managing the accounts of investors who have these managed accounts.
In this case, investors put money into an account of this type and allow a skilled trader to invest and perform the operations in the market that he believes to be the most profitable using this capital according to his knowledge and experience. Thus we can say that is a form of Forex autotrading based on human traders but it has the advantage that the investor does not have to do nearly anything, just check the status of the account (profit / loss) and ensure that the account manager is making profits. In fact, the investor does not have to worry at any time of the transactions carried out by the money manager.
PAMM managed accounts are a great option for those who want to invest in the financial markets like Forex but do not have the time, knowledge and experience necessary to operate on their own. Thus through a PAMM the investors make use of the services of skilled traders who are responsible for these tasks for them.
To have a clear notion of what are the PAMM accounts and how they work please read the following article: