Tired of losing money online? Or is it that you just want to increase your profit margin in your online trading account. These are some of the driving factors towards the growth of automated trading over the last few years.
Other traders basically prefer automated trading because they do not have the time to keep track of the rigorous and harshly punishing market, while others simply lack the expertise to do things on their own. I am not talking about a mutual fund here, or the 401-K.
I am talking about a type of trading that involves minimum interaction to with the trader, while a software-based system takes care of the rest. Automated trading software is capable of picking trades for you as well as closing them at the right time based on a set of rules developed by the software maker and a few added conditions by the user/trader.
So Why Automated Trading
I mentioned briefly that not all traders are able to conjure up some magic in the world of online trading and thus earn meaningful gains. In fact, according to research, 90% of retail traders including those in forex trading and future options cannot consider themselves successful.
This fact has created an incentive for trading software developers to develop various trading systems that are designed to help novice and inexperienced traders to make some meaningful cash from online trading.
Additionally, some people have full time day jobs, while others simply cannot come to terms with the market and would prefer using third party trading services to do the job for them.
What can you trade with automated trading software?
Most traders looking to capitalize these types of systems are trading the Forex markets. Basically, with forex trading, traders can trade various currency pairs, commodities and in some cases CFDs.
Forex Automated Trading Software
Most traders can now come up with their own trading systems also known as Expert Advisors, thanks to trading platforms such as MT4, which allow traders to automate trading.
Generally, these trading expert advisor systems are based on various indicators and some specific inputs by the user. The image below is a snapshot of a sample MACD-based Expert Advisor system, which allows traders to auto trade via the MT4 platform.
The Meta Trader 4 Expert Advisors can also be used to pick trading signals while traders place trades themselves, which allows them to bring in personal judgment thereby avoiding being caught up in situations where technical indicators fail.
Some of the most likely triggers of such situations are heavy market events and unexpected activity from corporate traders. Therefore, it is advisable that when using automated trading software to trade online, traders ensure that such events are filtered from their systems, which means no trading signals are generated during such times.
Choosing a third party auto trading system
Ideally, every great opportunity will always be faced with various challenges. Now following the influx of automated trading systems over the last few years, some people have sought to be canny and hence floated scam systems online.
Unsuspecting traders have found themselves on the wrong end of this crime, and thus it is good to observe caution when choosing an automated trading software from a third party organization or individual.
Therefore, it is important that if available, ask for the free trial period to test the system before purchasing. Additionally, it is also good to ask for proof of results in order to determine how the particular system has performed in the past. It is more or less back testing a trading strategy, so you would want to make sure that you won’t be paying for a system that robs you money rather than win you some more.
Finally, make sure that the price is reasonable and that it fits well in within your trading plan. You do not want to buy automated trading software that costs you $1000, when you only plan to invest $300.
Wrapping it up
The bottom line is that most Automated Trading Software developers will always advertise the good side of the product, as will many brokers, but few will care to look at the other side of the coin and reveal the drawbacks of using such programs.
Nonetheless, if you are really looking to make money online from trading various currencies, and if you do not have the experience to make it big time, A careful look at some of the other ways of trading the market such as using automated trading software may be a viable option.