There are many challenges associated with trading foreign exchange, but you can earn profits on every attractive trade with automated forex software. The problem with trading forex is that it’s easy to get emotional and make snap decisions that turn out to be unwise, but automated forex software enables you to get around your emotions.
What is automated forex trading software?
Also referred to as algorithmic trading or robo or robot trading, automated forex trading software provides many advantages to users. The software functions automatically without the need for the trader to be watching the markets at every moment.
It scans the market for forex trades that will be profitable, using parameters that were either preset in the program or that the user set ahead of time. The software conducts trades automatically so that you can go off and do other things without worrying about missing opportunities for a profit.
Automated forex trading software analyzes current price charts for global currencies and looks at market activity across various timeframes. It then picks up on various signals like spread discrepancies, price trends and headlines that could affect currency prices. Using all these inputs, the software then identifies profitable trades on various currency pairs and executes them.
The benefits of using automation to trade forex
The most obvious benefit of automated forex trading software is being able to make profitable trades while you aren’t even watching the markets, but that’s not the only one. Another significant advantage of using software to trade forex is that you avoid falling victim to your emotions.
It’s very common for psychological triggers to get in the way of making a profit in the markets, so software removes these triggers and executes trades for you. Automated software keeps you from making poor decisions as a knee-jerk reaction to something that happened in the market.
You’ll be able to turn more profits if you’re making decisions based 100% on the facts instead of your emotions. The software can create parameters for you without your input, or you can set the parameters using your own knowledge when you aren’t facing any psychological triggers. Your trades become consistent and unemotional, resulting in higher profits.
Using automated forex trading software for spreads
Currency speculators have another advantage of using automated forex trading software. Speculators tend to make trades based on currency spreads rather than interest rates, so for them, automated software can be even more effective because price discrepancies become obvious immediately. The trading system instantly reads these discrepancies and executes the trades.
The software also reads chart patterns like triple tops and resistance or support levels. It also sees other trade signals like moving average crossovers and potential bottom or topside breakthroughs.
Additionally, the software enables traders to oversee multiple forex accounts at the same time, which manual traders on only one computer can’t do. Some forex traders can also benefit from automated software if their jobs or other activities prevent them from studying the forex markets, analyzing charts or watching for trade signals.
Choosing the best software for your needs
No two software programs are the same, so you’ll need to do some research before committing to one. Many software options offer excellent features and work quite well, while others are good but don’t offer as many features or benefits. A few aren’t good at all.
Some software makers tout their programs as offering “over 95% winning trades,” but it’s important to verify such claims. It would be a good idea to look for a software program that includes authenticated trading history results so that you know what you are getting. However, most software programs will also come with the disclaimer stating that past performance is no guarantee of future results.
Automated forex trading software presents some excellent opportunities for traders. Beginners can learn a lot from using such software, and seasoned traders can take advantage of having a robot to execute trades for them. Every trader benefits from not letting their emotions get the better of them.