Forex Trading Library

Auto trading forex – Should you use an EA?

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A trading looking for an auto trading forex solution is bound to end up confused given the choices of various expert advisors that are available in the markets. To add further to this confusion, some auto trading forex expert advisors further complicate things by adding in different variables and metrics simply to boost up the EA’s performance. It is therefore not surprising to see why most traders looking for an auto trading forex EA often end up hopping from one EA to another, just like a manual trader ends up jumping ship from one trading strategy to another.
For starters, some auto forex trading software applications do come with money back guarantees which offer a certain level of security to your purchases. However, it is an entirely different story if the EA vendor actually honors your refund request. Finding the perfect auto trading strategy is by no means an easy task. A quick look around various forums will often reveal most negative reviews for various EA’s outnumbering positive reviews. Due diligence is therefore of the essence.
One of the main reasons why forex auto trading EA’s are in demand is the fact that they tend to trade without emotions and only by a strict set of logical rules. However, the biggest drawback is that automated trading does not recognize the subtle shifts in the market, which tend to change at a moment’s notice. Auto trading forex EA’s therefore are vulnerable to this variable, which highlights the fact that when choosing an auto forex trading solution, the trader needs to consider the risks. These risks are often blinded by the trader’s emotions such as greed, where the monthly or yearly returns numbers tend to outweigh and potentially blind the trader to asking more important and/or critical questions.
It is not uncommon to find most beginners forex traders often on the lookout for an auto forex trading solution. Chances are that the trader tried their hand at manual trading, lost money and thus is looking to a different route in order to make money from trading the forex markets. But is this the right approach?

Advantages of auto trading forex

Auto forex trading for starters can trade round the clock unlike a human. The forex markets are not centralized and are therefore open 24 hours a day. The potential trade opportunities one might miss can often be taken advantage of by the auto forex trading solutions that a trader can deploy. In other words, the biggest advantage of using an auto forex trading software is the fact that trades can be taken regardless of the time zone.
There are no emotions involved when using an auto forex trading strategy. Emotions as we all know is one of the biggest factors that is detrimental to a trader’s growth. It often results in mismanaging the trading capital or making mistakes because a trader is biased to one side despite the markets moving in the opposite direction. An auto forex trading software fits in well especially if you are prone to emotions while trading.
Auto forex trading is built on a strategy that is developed by another trader or a coder. The basis of the strategy could be a trend following strategy that works on the higher time frames, or merely taking advantage of the markets when they enter a sideways range. Regardless, traders should note that auto forex trading is not a holy grail but is simply a manual trading strategy which has been automated based on the rules.

Disadvantages of auto trading forex

Auto forex trading software is often back tested and is usually optimized. There is a high risk that the EA’s settings have been optimized to bring about the best results in backtesting. This is commonly known as curve-fitting and is one of the biggest pitfalls when using an auto forex trading software.
Auto forex trading can often be expensive, although you can purchase one for as little as $10. While the question of how much you should pay is very subjective, it is better to know/understand that EA’s do require an initial investment and the bigger fact that you would be risking your trading capital on an automated trading solution.

Should you be using an auto forex trading strategy?

Now that you have an understanding of the pros and cons of using an auto forex trading strategy, the question is basically one of a personal choice for the trader. If you are short of time or knowledge and cannot dedicate the time or resources to learning, investing in an auto forex trading strategy could be the most ideal choice.

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