Many people have heard about automatic Forex trading, but do not fully know what that entails. In this article, I would like to briefly go over what automated trading is and the forms that it can take.
First of all, automatic Forex trading is just that, it is having an account traded hands-free with the use of some type of software. The most common type of automatic trading software is what we call an EA which stands for Expert Advisor. There are thousands of Expert Advisors out there, and they are most commonly run on the MT4 platform. An EA can also be called a robot or an automatic trading system.
An EA is a piece of software that has certain criteria built in that allows it to trade completely on its own. Many EA’s have the option of sending you a signal and allowing you to make the final decision on whether or not to enter the trade, but the common thought is that if you are purchasing an EA you should let it do what you bought it to do on its own. Something all EA’s have in common is an input area. Inputs include things like how big of trade size do you want it to take, what is the max stop loss you want it to have, how many trades you want it to open at the same time, etc.
EA’s have a dramatic range of properties. Some EA’s are very basic, built upon a simple strategy with only a few inputs. Other EA’s are extremely complex, based on strategies with a ton of complicated entry requirements and having hundreds of inputs to be concerned with.
As I said, EA’s are by far the most common way of automated trading, but they are not the only way. Another common type of automated trading is trade copying or mirror trading.
In this type of trading, you are basically attaching your platform to another traders and setting it up so that whatever trades he or she takes on their account are automatically copied over into your account. This type of auto-trading is more appealing to many people because they trust their money with a real, proven trader rather than a robot.
In trade-copying, the one receiving the trades has to worry about a few things. First, he or she must adjust the size they are trading with so that their account is not wiped out. For instance, if your account is at 5 thousand and you are copying the trades of someone using a 100 thousand dollar account, they will be trading lot sizes that are way too big for your account to handle. Most copying software gives you the ability to easily adjust this to protect your account. Another thing you might want to check, if you are copying someone’s trades, is the platform they use. If the trader is using 500:1 leverage and is allowed to hedge, while the follower is using 10:1 and has no hedging, the trader can be in fine shape on a trade while the follower is close to margining out. Of course, if the trader is hedging while the follower can’t, you will also be in a lot of trouble. As long as you keep your eye out for issues like these and are connected to a good trader, trade-copying can be a great way to auto-trade.
So that was a quick look at the 2 main types of automatic Forex trading and what they are all about. If you are interested in having your Forex account traded automatically, check out what Winner’s Edge Trading has to offer. Also, let me know what experiences you have had with this type of trading.
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