The Forex marketplace is where you can buy and sell currencies. Play the market right, and you can make a great profit. But given how quickly the market moves, it can be hard to keep track of what’s happening. This makes it tricky to know when to buy, and when to sell. 

That’s where “artificial intelligence”, or “AI”, tools can help. Below, we look at how AI trading in Forex works, and whether Forex robots are worth giving a try. 

What Is AI Trading?

AI trading means using special computer programs to help you decide when to buy and sell assets. How do these programs work? Well, they’re not your average computer program.  

They can actually learn just like humans do.  

AI tools can be set up to study the market, learn based on the trading data they scan and read, and make trading decisions. Don’t worry, though – you still have control over these “bots”. They can just help you develop a trading strategy based on the data they analyze.  

How AI Trading Works

The “bots” learn based on models, or algorithms. They look for patterns. They analyze current and historical data and learn when it’s a good time to buy or sell. They can make the calls for you, or just send you signals which you can then decide whether to act on.  

The trading bots continue to learn, the more data they are exposed to. Meaning, the more information they have, the smarter the investment decisions they can make (just like us humans, really).   

What Is Forex AI Trading? 

Forex AI trading is using computer programs to buy, sell, and trade currencies on the Forex marketplace. 

• You decide what “rules” you want the robot to play by. For example, you might tell it the least you’re willing to sell for, or the most you’ll pay for a currency pair.  
• The robots, or programs, analyze a wide range of market data. 
• They learn how to read algorithms and spot patterns. For example, they might learn how to predict price trends and changes.  
• The bots continue to learn the more data they are exposed to. They will make decisions based on the rules you set. 

Types of Automated Forex Trading Tools

There is more than one way to trade Forex using AI. This is helpful, because even if one tool doesn’t work for you, another one could be perfect. The most common Forex AI trading tools are robots and signals.

• Robots: Robo advisors use algorithms to make trades on your behalf. You set the parameters and the limits, and the robots work for you. 
• Signals: The tool sends you signals, or alerts. You can then decide whether to buy or sell based on the data received.  

Pros of Using Forex Trading Bots and AI

Bots and other AI tools can help you become a better Forex trader – here’s why! 

• Computers don’t need sleep. They can keep working for you while you focus on other tasks.  
• A bot can analyze far more data than a human. This can help them make the most accurate, informed trading choices.  
• Bots can analyze chart patterns and graphs much quicker than a human can. If you rely on technical analysis, this is helpful.  
• Computers don’t have feelings. They won’t be influenced by anger, frustration, or other emotions. They’ll make trades based on data alone.  

Whether you prefer a “hands off” approach or want to make your own trades, Forex bots can help.

Cons of Using AI and Robots for Trading Forex

On the flipside, even the best Forex robots aren’t perfect. And AI trading is not for everyone. Here are a few downsides to using robots for trading Forex. 

• Bots aren’t perfect. They could malfunction and give you the wrong data. Or, worse, they could make bad trades based on this flawed data! 
• Any bot, even a high quality one, could be hacked. There’s a risk of a data leak or other system errors.  
• Trading bots don’t have human instincts. They may struggle to understand what subtle market changes mean.  
• Some trading bots are expensive. And this does not mean they are high quality – or secure. They may not all comply with relevant Forex trading laws.  

How to Create an AI Forex Trading Strategy

If you have decided that AI trading could be right for you, then you need a plan for moving forward. Here are four simple steps to get started with AI Forex trading. 

Set Trading Goals

First, you need to know what you want from AI trading. Then you can choose the best tools to support those goals.  

For example, maybe you want more control over the trades you make. You’re not comfortable leaving a robot to make all the decisions, or you just enjoy feeling more involved. Or maybe you want your Forex robot to make a lot of decisions for you. Perhaps you’re super busy and you just want to set up parameters and let the robot do its thing! 

What suits one trader in the Forex market won’t suit another. So, think about what you need from your Forex robots before going any further.  

Know Your Limits

Every good trader has limits. The amount they are willing to lose if things go wrong. And they have a strategy to manage risk, too.  

As part of Forex trading, you need to consider how much you can afford to lose if your trading decisions don’t pay off. There’s never any guarantee that a trade will be successful, and you need to know when to cut your losses and move forward. 

Try a Demo Account

New to Forex trading? Demo accounts are the perfect place to learn the market.  

How do demo accounts work? They’re really like regular trading accounts. The difference is that you trade using simulated capital. But otherwise, you trade based on real, live market conditions! 

And if your trades pay off, you keep most of the profits. You only give the prop firm a small percentage of your earnings in exchange for platform access.  

Learn the Market

Buying and selling currencies is not easy. The Forex market is constantly shifting. Part of your job, as a Forex trader, is to never stop learning. The more you understand what affects the market and why prices change, the better trading decisions you can make – with or without AI.  

AI should never replace you. It’s a tool in your toolbox, but ultimately, you are the trader with the talent! Don’t lose your ability to make trading decisions just because you have access to AI robots to help.  

Join the Maven Trading Community

Are you ready to gain more trading experience? Then Maven Trading can help. Complete our challenges and we’ll give you a simulated funded account to start trading with. You can develop your own trading process and learn the ropes – all without risking your own money!  

Join the Maven Trading community today. Learn how to make profitable trades and reach your potential. Choose an account and start your journey now!