Automated forex trading is a form of trading in which the transactions are not made by the trader but by his automation tool. Here, the automation involves using expert systems that keep a track of old market results and influencing factors. By studying them, these tools are able to point out profitable transactions. These are most beneficial for traders with no or little knowledge of the forex world. Use of an automated forex trading tool provides the trader with an edge that can be further enhanced with the use of various optimization techniques.
Factors Affecting Automated Forex Trading Styles
Once you have in place an effective automated forex trading system, you need to choose the style with which you are going to use it to trade. Given below are some factors that must always be kept in mind:
1) Leverage: Leverage is the concept of spending more than you possess. With it, you can double the profits on the one hand or end up losing all your money on the other. The value of leverage determines the amount of money you are willing to risk. Higher the risk, greater will be the profits. For safe automated trading, it is recommended that one keeps the leverage low.
2) Personal Touch: Your automated trading should have a uniqueness fitting your lifestyle. For this, you need to search for a forex system that is most compatible with your time zone. I should also reflect your trading style accurately.
3) Stop-Loss Order: Stops are fixed points in any trade placed below the original trade value. On reaching them, the automation tool immediately sells the securities to limit losses.
4) Keeping Track of the Win-Loss Ratio: Automated tools work based on their own calculations. The effectiveness of such tools cannot be calculated based on certain profitable or losing transactions. One needs to study the average of all the transactions, made by the system, to know whether it is good for you or not.
Advantages of Using an Optimized Automated Forex Trading System
Automated forex trading systems have introduced a whole new group of traders to the forex world. These new traders are only concerned about making profits and are not interested in knowing the tricks of the trade. However, using such tools can sometimes prove disastrous. For example, if a trader uses his system to trade without putting stop-loss orders, he stands to lose all his money if the market goes down. On the other hand, placing the order before hand will not only cut back losses, it can even lead to profits in a fluctuating market.
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