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Forex Trading Automation Ins And Outs

Automated trading promises great flexibility to traders who know how to implement it correctly.

Forex Trading Automation Ins And Outs
Photo by Wance Paleri / Unsplash

Automated trading promises great flexibility to traders who know how to implement it correctly. Imagine sleeping in your bed while the trading robot scans the markets and executes trades when catching proper setups, you wake up and the robot has already made profits. This article is focusing on describing forex trading automation and how traders can implement it.

Trading robots

Depending on the trading platform, there are countless robots available. For MetaTrader 4 and 5 it is easier to find a free Expert Advisor or EAs as they have one of the biggest marketplaces for robots. Selecting the best Expert Advisors to try out on MT5 is even easier here. Automated or algorithmic trading involves a trading algorithm that does the trading process automatically without user intervention. It is also possible to use robots without programming knowledge, as there are countless free and paid robots online to download.

High-Frequency Trading

There are different approaches to algorithmic trading. One of the most expensive ones is called high-frequency trading or HFT and is a method deployed by big hedge funds and financial trading companies. It involves powerful computers opening trades within a fraction of a second to capitalize on market deficiencies. Trading opportunities that HFT algorithms target are happening in a short window, and it is impossible for human traders to react to them. Therefore, these algorithms are not cheap, and it takes substantial capital to deploy an HFT trading robot and maintain it. Beginners on a tight budget are advised to use other alternatives for forex trading automation software. Some of them are described below.

Forex Trading Automation Ins And Outs

Trading automation pros and cons

Trading robots are exciting software that can automate the trading experience, but you will need to take into account their advantages and disadvantages. It is critical for beginners to know what they will face when starting the automation process.

Trading automation pros

  • Ability to fully automate the trading process
  • Less time is needed to stare at the computer screen
  • Removes emotions and psychological challenges from trading
  • Can scan markets within seconds for proper setups
  • Can manage risks more accurately

Trading automation cons

  • Requires more knowledge to download and deploy the bot
  • For developing automation algorithms, advanced programming knowledge is required
  • Bugs can cause losses, any mistakes within a code can cause the robot to lose money or behave abnormally
  • Very risky during volatile times like macroeconomic news and events

Trading automation with different trading platforms

If you decide to continue reading despite the cons mentioned above, then let’s describe some of the most popular trading platforms that support trading robots.

Expert Advisors on MetaTrader 4 and 5

Another more beginner and budget-friendly approach for forex trading automation are EAs that are available for free for MT4,5 and other trading platforms. MetaTrader platforms have most of the robots available, as they are very popular and have a large community. There are also paid robots that can be downloaded and tested before paying money for the full version of EA. The marketplace for EAs is easy to find and navigate, and you are free to download and test robots. MetaTrader robots use MQL5 programming language that is dedicated to custom indicators and EAs building, making it easier to learn and use it. For programmers, it will be easy to implement but for beginners, it is better to develop a profitable automation forex trading strategy first and then hire a programmer to translate it into an EA.

cBots on cTrader explained

cTrader is another popular trading platform, and it too supports advanced trading robots called cBots. There is a marketplace dedicated to this topic and any user can add or download free robots for testing and trading. The cTrader platform uses c# as a programming language, making it comfortable for programmers who have any experience with the language to develop their own custom trading robots. This is an advantage for cTrader when compared with other platforms, as it is accessible to a wider audience of programmers.

TradingView automated strategies

TradingView offers the ability to build custom indicators and automated strategies with its proprietary pine script language. It is a very simple, intuitive, and python easy-to-use language that can be learned faster. Another good thing about TradingView is its growing traders' community of 30 m+ users worldwide. Many users are sharing their strategies and custom indicators for free. When it comes to custom indicators, TradingView is king. It will require some more knowledge to connect your strategy to your broker's API to deploy an automated trading strategy and automate the trading process fully.

Final thoughts

Forex trading time based automation has increased and become increasingly popular among traders due to its ability to remove human emotion and execute trades quickly. Different trading platforms offer various options for trading automation, including expert advisors on MetaTrader 4 and 5, cBots on cTrader, and TradingView automated strategies. While robots have their advantages, such as the ability to manage risks more accurately and scan markets quickly, there are also drawbacks, such as the need for advanced programming knowledge and the potential for bugs that can cause losses. Traders should carefully consider the pros and cons before implementing forex trading automation and choose a platform that suits their needs and expertise. For beginners on a tight budget, it is better to use trading robots offered by the abovementioned platforms, as HFT is expensive to operate.