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Auto Trading: A Beginner Guide to Automation in Forex

Currencies / Forex Trading Oct 21, 2020 - 02:00 PM GMT

By: Submissions

Currencies

Among the notable technological advancements in the forex ecosystem is auto trading. Not only does it replace manual trading but it is also making forex trading simpler and more profitable.

Before you decide whether or not to apply auto trading in forex you need its basics and where to use it.

What is auto trading? It the use of software to analyze markets as well as complete trades. It involves the application of artificial intelligence in forex trading.


Therefore, you automatically analyze the market, manage risks as well as in the open and close trades. Here’s is more explanation:

How to Apply Auto Trading

There are 3 main ways to apply auto trading in the forex. These include:

Market Analysis

Market analysis involves determining the possibility of prices falling or rising. There are 3 main types of market analysis. These are technical, fundamental, and sentimental analysis.

Technical analysis entails using past data to predict future changes in price. Fundamental analysis involves forecasting price change by tracking political, social, or economic changes. Sentimental analysis, on the other hand, entails following other investors’ opinions to forecast prices fall or rise.

Auto trading mainly applies to either technical or fundamental analysis. In technical analysis, the artificially intelligent software studies a variety of past charts.

It, then, predicts prices falling or rising in the future. In fundamental analysis, the software tracks economic and political factors that influence the change of currency prices.

An auto trader betters forex trading because it gives more accurate price predictions than human beings. Besides, the software captures slight changes in milliseconds. Therefore, you can make a well-informed and quicker decision.

Risk Management

Apart from raising your earnings, an auto trader widens your profit margins further through risk management.

First, it checks the number of open positions. Open positions are pending transactions such as the number of currency pairs awaiting selling. The more the open positions, the riskier your portfolio is.

To lower risks, an auto trader reduces the size of open positions. The software can monitor and undertake actions such as stop-loss orders.

Stop-loss entails instructing the software to manage price changes by halting trade when prices fall to a particular price. This is to avoid losses that would, otherwise, result when currency prices drop beyond a certain level.

A take-profit is the opposite of stop-loss. It involves monitoring prices as they rise above the buying price.

You aim to make the most out of the upward trajectory. To achieve this, you can set a maximum price level beyond which trading should stop. An auto trader makes the process better due to the utmost accuracy that the software induces in your trading.

After accurate analysis, the software determines the best level to initiate either a stop-loss or take-profit orders. For this reason, there is less possibility of making losses from the forex market.

Opening and Closing Trades

Apart from starting stop-loss or take profit orders, you can automatically start trades. For example, you can pick a currency pair to buy.

Without automation, it would be hectic since choosing a currency pair usually entails a careful analysis. Auto trading induces accuracy and speed in the opening and closing of trades.

Hence, you can complete thousands of trades per second. Here’s the more exciting part:

Automation gives you the freedom of widening your investment portfolio. Since the software does profitable trading on your behalf, you can, instead, use that time to follow other investment options like commodities, shares, and CFDs.

Conclusion

Auto trading has made it possible to earn a living through forex trading. Better yet, the software enables you to realize your wealth missions.

You no longer have to undertake the tedious market analysis. Neither should worry about managing risks or opening and closing trades. All you need is simple:

Apply auto trading and earn more from your forex investment.

By Russell Fenton

© 2020 Copyright Russell Fenton - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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