What Impact is Automated Forex system Trading having?
Forex trading opportunities have changed dramatically, it was not that long ago when a deposit of $100,000.00 was your entry level to trading. Now you can open up an account with $500 (in some cases even less) and start day trading. Although the capital traded dropped considerably the trader still had to adhere to the basic rules of trading.
1. Use a trading system that had a success rate of 60% or more.
2. Understand risk/reward ratios.
3. Understand leverage.
4. Stay with your trading system, have patience, wait for the right time.
5. Do not change your exit time by holding on for extended profit or holding on to a losing trade waiting for it to turn around.
6. Sound money management.
7. Choose the right Broker.
However even this is changing as we have seen the advent of EAs (Expert Advisors or Robots) arriving on the scene. All of a sudden all the qualities needed to be a good trader are no longer needed, “anyone can buy a piece of software download it and start making money, apparently you don’t even need to know anything about the Forex market”. Naturally, at this point most Traders walk away saying what a load of rubbish.
Most of these systems are used for day trading and scalping .Well I decided if trading can be automated I would be in to try it. Having to watch screens in the middle of the night has always been the downside of trading for me and one of the reasons I prefer swing trading.
I have bought and tried various robots on offer and have had mixed results. Some needless to say were hopeless however with the newer generation ones I have been pleasantly surprised. I would say if you know nothing about trading you are going to find it harder. The more you understand how the market works and in particular the currency pairing you are going to trade in, the more successful you will be. The basic rules relating to money management and understanding the different values of pips and lot sizes is still a large part of trading. The other main point to understand is leverage. One of the attractions of the forex market is being able to gain large profits by using leverage. Unfortunately the down side is if you can trade higher profits you can also have larger losses. Even if the system is 100% automated this does not mean 100% successful. There are going to be losing runs and you must understand how to manage your equity.
My advice is try these automated systems (only look at the ones that are fully guaranteed), trade only using a demo account(paper trading) until you get an understanding of when it is trading and how often and gauge what your true profit is. Don’t forget you are paying your broker for trading (the spread) and this comes out of your profit. The more often the robot trades the more you pay the broker. I have written a full review on my experiences with the forex automated trading so please visit my site.
Good luck with your trading.
Lyndsay Wilkinson
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