Essential Principles of Automated Forex Trading

Automatic Forex trading is a method of speculative investment that is gaining more and more ground. The credit goes to the brokers, who have been able to integrate a seemingly complex tool within the platforms, so that it can be used by ordinary traders. However, the resource through which it is practiced, robots, are double-edged swords. To be used to their best potential and produce concrete results, it is necessary to know all their aspects and constituent elements.

The principles of automatic Forex trading

Automatic Forex trading refers to the trading method that allows the user to be replaced by software. This software, aptly called a "robot," manages the operations on behalf of the trader. Automatic Forex trading should not be considered as a gimmick to make money without doing anything. In fact, the use of robots requires market knowledge, programming, and, when necessary, the ability to change course. Obviously, it is also necessary to master a tool whose dynamics are not intuitive at first glance. It is important to acquire awareness of a fundamental aspect: automatic Forex trading allows you to save time, yes, but it is not an easy and ready-made shortcut to be taken. A basic principle of this interesting trading method concerns the relationship between strategy, tactics, and operations. The three elements, from the perspective of automatic trading, are clearly distinct and can therefore be addressed through different dynamics. They represent three moments, well separated and autonomous, of the investment process. It is thanks to this particular conception, in any case confirmed by empirical experience, that it is possible to delegate at least one of these phases to a "machine." Specifically, it is the operations that are delegated. In short, the trader programs the robot's actions, sets specific settings, draws the boundaries of the software's action, and... waits. If necessary, of course, they intervene to change the settings on the fly. Another fundamental principle lies in the issue of flexibility. A robot is truly useful only when it is flexible, i.e., when it adapts to the user's trading style. Each trader is different from every other, not only in terms of skills but also in approach. The software must offer possibilities to all profiles, adhering to the basic vision that each person has formed. It must therefore be functional for fast trading, scalping proper, long-term investment, and more.

Automatic Forex trading: advantages and disadvantages

The biggest advantage of automatic trading is the elimination of emotions. The concept is quite simple: trading involves a really considerable amount of stress, in which the appearance of feelings such as fear or euphoria deprives one of the clarity necessary to operate effectively and rationally. Well, if you delegate the operations, i.e., the most stressful phase, to the machine, then you protect yourself from this dangerous drift. This makes robots one of the preferred tools for beginners, who are precisely the individuals who suffer the most from "trading stress." Moreover, automatic trading allows for almost total coverage in terms of time. It is impossible to even think of seizing all the opportunities that the market offers, also because the Forex market is "open" 24 hours a day, 5 days a week. But obviously, software does not suffer from fatigue, so robots are a fundamental resource for "beating the market." Finally, since the automatic approach frees up physical and intellectual resources, the trader can practice different strategies, manage multiple accounts, and test the most varied systems. In fact, software can monitor and manage multiple "trading lines" simultaneously. The downside is almost painless, but it exists. Even automatic trading has its "cons." First, it is highly susceptible to technical problems. It is enough for the connection to drop for even a few seconds to blow a winning trade. For this reason, some companies offer external servers, such as VPS, capable of guaranteeing solid coverage. Moreover, the machine is... stubborn. It perseveres in error and is unable to correct itself. It does not have, in short, interpretive capabilities. If on the one hand this affirms the primacy of man over robots, on the other it can lead to uncontrolled losses. For this reason, it is best not to leave the program open at night, but to follow it constantly. After all, it is always better (and less tiring) than operating personally all day long. In conclusion, automatic Forex trading, net of some negative elements, can be considered a useful resource. Provided that one knows how to use it. In trading as in life, in fact, "there is no free lunch," there are no shortcuts that do not lead, sooner or later, to dire consequences. The advice, as usual, is to study and develop skills, specifically in the use of this tool.