Exploring Automated Forex Trading Systems January 24, 2018 Contents hide History of Automated Forex Trading Systems Types of Automated Forex Trading Systems Fully Automated Forex Trading Signal Based Forex Auto-trading Advantages Disadvantages Automated forex trading systems are platforms through which foreign currencies are traded using a software application that is designed and programmed according to an algorithm that will help you decide if you should purchase or sell currency at any instant. The program makes decisions on the basis of signals that have been derived by technically analyzing the various charting tools available. The signals can then indicate a purchase or sale if their direction is the same. There are several automated trading forex systems that can be accessed online through the internet. Generally, these programs are used by traders who are extremely active in the field. History of Automated Forex Trading Systems Forex auto-trading originated in the late 1990’s from retail trading, which was executed through the internet. At that time, online companies started creating forex trading platforms so that individuals could purchase and sell currencies faster than before. However, forex auto-trading was in use even before this period by large retailers but was not so popular back then. Even in the 1970’s, these companies could auto-trade their contracts at Chicago’s Exchange. Types of Automated Forex Trading Systems Forex auto-trading can be divided into two major types. Fully Automated Forex Trading Fully automated forex trading is also referred to as robotic trading. This type of forex trading can be regarded as black box trading in which a programmed algorithm makes decisions by considering factors such as price, quantity, and timing. The order is then initiated automatically. In fully automatic trading, interference from a user is limited in the sense that a user can only modify the technical parameters. The rest of the control is handled by the program itself. Signal Based Forex Auto-trading In signal based auto-trading, the orders are manually generated with the help of a trading system. All the traders from across the globe share their strategies with every individual, and if someone is interested in them, then they can use them as signals. The traders can execute these Forex signals into their accounts if they wish. Advantages A forex auto-trading system is capable of generating more trades in a market when compared to a human trader. If manual trading is used, then it takes time to handle trades and replicate their actions across multiple time frames and markets. Forex auto-trading can accomplish this same task in a shorter time period. Moreover, a human trader is often affected by physiological swings, but these have no impact on an automated system. The significance of this advantage is prominent when a mechanical mode, which has been developed on the assumption that flagged entries will be considered in real time, is traded. Another benefit of auto-trading is the fact that the traders involved do not need deep knowledge in the field. They can trust any system that has performed well in the past. Thus, many individuals can use the forex trading system. Disadvantages Forex auto-trading is an unregulated and decentralized market, which lures potential scammers. Thus, frauds are not uncommon, and care should be exercised. Organizations such as the U.S. Securities and Exchange Commission are trying to minimize this to the lowest possible extent.