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Does Automated Trading Really Work?
Running your
online business using a automated trading
system on your Forex account may turn your
trading career into a money making venture.
Traders from around the world use trading
robots to manage their accounts, and some
are very profitable!
The Future is Here Now
Technology is now making it possible for the
smaller retail Forex trader to use the same
type of trading program that institutions
have been using for years.
Trading
robots, or as many call them, Expert
Advisors (EA's) are actually small software
programs which enter and exit trades based
upon certain rules. Many different type of
robots are available for Forex trading and
prices range from free to hundreds of
dollars or more.
The Trading Platform
The
MetaTrader
solution is the most common platform used
for automated trading. There are hundreds of
brokers offering trading with this platform,
but as usual, do your homework before
sending your hard-earned cash to anybody!
The trading programs are copied into a
special folder within the software and once
activated, execute trades based upon how
their parameters are set. Most of these
robots allow a small amount of adjustment to
suit your risk level.
There are pros and cons to automated trading
and you need to be sure they suit your
circumstances, so there are a few things you
should consider before you jump onto the
robot trader bandwagon.
Why Does people use Auto Trading?
Our
emotions are usually what gets us into
trouble while we are trading. If you have
done any trading at all, you know the
emotional roller coaster ride you take while
trading... profits appear, then they're
gone, maybe some losses, then profits again,
back into loss and on it goes. We have a
plan, but once we see profits or losses, our
fear, greed and confusion take over and we
abandon the plan we spent all that time
preparing.
Trading robots on the other hand, are
programmed to execute specific actions based
upon certain events. Their complete lack of
emotion makes them the (almost) perfect
trader. They don't get caught up in the
excitement, but simply do what they were
designed to do... time after time.
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The Flip Side
This
type of trading does have limitations.
Probably the largest one is the robot's
inability to know what is coming in the way
of news and data.
The trading action is based upon indicators,
which are based upon historic prices. As
soon as a new tick is made, the previous one
is history. By this measure, the robot is
unable to predict the future of prices.
Add to this the robot also doesn't know the
NFP or interest rate numbers are about to be
released, which could easily result in a
major blindside to it's trading plan. This
is usually overcome by switching off the
automatic system during news times.
Since these programs are running on your
computer, your system needs to be left
running and connected to the internet for
the entire time the market is open. Usually
a broadband connection is also required or
desired to ensure the data stream remains
constant. The
FAP
Turbo robot mentioned above offers a
hosting option so they will actually run it
on their server, which will free your
computer from this requirement.
We would also recommend that you manually
enter a stop order when a trade is made if
your robot do not put out a hard stop-loss
when trades are taken. So you should check
if your Forex trading robot put hard
stop-loss in place. Some Forex robots don't
put out a hard stop-loss order but rather
monitor losses internally and act when
necessary. The risj here is that should your
system happen to go down for any reason, you
would be left without any stop-loss
protection on your trades with this type of
robot. Of course you can manually enter a
stop order for safety sake when a new trade
is opened, but what if it's 2:00 am and it
just happens to be a night when you can
sleep! Just beware.
The Bottom Line
We think
that the automated trading robots are the
future for people like us who wants to run a
online business or earn some extra money
working from home. We all know that to be
successful, we have to put our emotions
aside. It's much easier for your computer to
do that and it also doesn't mind working 24
hours a day!
We do need to keep an eye on things during
news times, but that issue will be cured by
smart programmers. Some trading programs
boast earnings of 1000% per year and more.
Timing and dealer intervention play a large
roll in your results, so they may vary.
Always use conservative settings with any
new EA's until you are completely familiar
with how they perform under all market
conditions.
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Choosing the Best Forex Broker
Choosing the best Forex Broker for your
trading will take some careful
consideration. Here are the things to
investigate...
Click Here to
go to the next page [The
Best Forex Broker]
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