As a Forex day trader, you’re constantly seeking the next opportunity. You make numerous critical trading decisions every day. Given the volume of trades you’re trying to complete each day, wouldn’t it be great if you could automate decisions?  

That’s where automated trading comes in. How does it work, though? And how do you choose the best automated Forex trading software for you?  

Well, to help, we’re exploring what you need to know about automated Forex trading. We’ll cover the pros and cons, and help you decide if automating Forex trades is right for you. 

What Is Automated Forex Trading?

Automated trading, or algorithmic trading, means using a program to make trades on your behalf. The trader sets the parameters, and the tool executes deals within those boundaries.  

Automated Forex trading means you’re using software to buy and sell currency in the FX marketplace. The robot, app, or program makes decisions based on the information you give it.  

How Does Automated Forex Trading Work?

The trader scans the marketplace and sets parameters for the program. For example, you might set rules for when to open and close, price levels, and quantities. You can also set risk management conditions, such as stop losses, too.  

Once launched, the program executes and trades for you. Just remember, though, that the app doesn’t make decisions. You, as the trader, still require the knowledge and skills to set the right parameters.    

The Pros of Forex Automated Trading 

For the right trader, automated Forex trading apps and similar tools are highly useful. Here are some major advantages to automating your own trades.  

1. You Can Trade 24/5

One of the upsides to Forex trading is accessibility. It’s truly the market that never sleeps. And with automated Forex trading, you can trade in whichever currency market you want.  

Day or night, you can set up your app to trade for you while you focus on other tasks. You can focus on learning the market and analyzing developments and your app works for you in the background. 

2. There’s Less Risk of Emotional Trading

Traders can get caught up in the moment and make risky decisions without objectivity. Setting up a robot to trade within parameters stops this from happening. You’ll make trades based on objective, real-time data rather than instinct (or, worse, panic).  

Robots don’t get stressed, either. Not only can they make numerous trades, but they’ll do so seamlessly.

3. Automated Trading Is Highly Efficient 

Humans can only work so fast. Despite your best efforts, there are only so many buy and sell decisions you can make. A robot, however, can go much faster. Decisions that could take you minutes, or hours, take a robot seconds.  

Day traders rely on high volume trading. So, for Forex market day traders, automation makes a lot of sense.  

The Cons of Forex Automated Trading

Automating your Forex trades does have its downsides. Keep your expectations realistic by being aware of some potential drawbacks. 

1. Lack of Adaptability to Changing Conditions 

The Forex marketplace is one of the most volatile and changeable markets in the world. It’s highly sensitive to global politics, exchange rate fluctuations, and financial news.  

Although Forex trading apps are smart, they’re not human. They can only work with algorithms – and they may be unable to pivot in response to changing market conditions.  

For traders, this could mean making suboptimal trades based on a lack of flexibility.  

2. No Nuance in Trading Decisions

Sure, it’s helpful to take emotions such as frustration and stress out of trading decisions. However, automated tools have no intuition or emotions to fall back on. They can’t detect subtleties or trade with nuance.  

The issue? They can’t respond effectively to shifting dynamics. And they may simply make unintended or wasteful trades. 

3. Risk of Overtrading 

Overtrading means you make too many trades within a short period. When you do this, you lose your market edge and expose yourself to unnecessary risks. You could also violate trading rules, or rules of your trading platform.  

You must monitor your Forex trading robots and apps for signs of overtrading.  

Forex Automated Trading Bots: Are They Right for You?

Forex traders may wish to consider automating at least some of their trades. However, it’s not necessarily right for everyone.  

• Traders who prefer more control over their own decisions won’t enjoy using bots or apps.  
• Automation makes trading more “hands off” and less personalized, which could take away from the enjoyment factor.  
• Trading bots aren’t foolproof. They’re no substitute for learning the Forex marketplace and being able to make your own trades.  

If you do decide to automate, here are some tips to start.  

• Choose your platform. For example, some trading platforms offer access to Forex automated trading tools as part of your account. And look for a platform with good customer service. If you have an IT issue, you need it resolved fast! 
• Know your strategy. You still need to know how to trade, so study the market and choose your trading strategy. Set your parameters in line with your goals.  
• Have a risk management strategy. There’s risk involved no matter how you trade. Set limits and stick to them.  

Start the Maven Trading Journey 

There’s no doubt that automated Forex trading can work. However, success is often determined by the trader’s ability, not the robot’s. That’s why it’s crucial to develop your core trading skills and learn which strategies suit your personality.  

How can you advance your trading skills? Join Maven Trading. We’re building a thriving community of talented traders – and there’s space for you.  

Simply complete our challenges, get a simulated funded account, and start trading under real conditions. You can keep your simulated profits (we only retain a small percentage).  

Get a demo trading account and reach your Forex trading potential. Start your journey today!