What is Automated Trading System and Trade Automation

What is Automated Trading System and Trade Automation

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Forex traders that are focused on technical analysis techniques will often set up a trading station in ways that allow for automated trading.  To some, trade automation might seem to be risky.  But when certain money management techniques are used, it is definitely possible for traders to account for regular profits using Forex automated trading system on the markets.

What is Automated Trading System

I bet you have heard the term automated trading many times recently. You probably ask yourself “What is automated trading system?” Here it is:

The automated trading involves the programming set of rules into your trading platform. Your platform implements these rules automatically by activating different trading processes. An automated trading system involves setting clear entry levels and targets on the chart, as well as Stop Loss rules.

Nowadays, the automated trading strategies are among the most used when investing in currency.

Forex Automated Trading Strategies

Generally speaking, there are two basic automated trading strategies that work. They are broadly used when Forex traders are looking to establish trade automation.  Automated trading in Forex can be separated into two basic trading techniques. The first are the ones that rely on momentum automated Forex trading strategies. The second are trading techniques that rely on contrarian automated trading strategies.  Here, we will look at some of the differences that exist for each of these automated trade techniques.

Momentum Automated Forex Trading Strategies

First, we look at momentum automated trading strategies which require a certain level of trend activity in order to generate significant trading ideas.  Trends are usually viewed as a series of higher highs or a series of lower lows.  When this is apparent, Forex automated traders can place their positions in the direction of the trendline in order to capitalize on the underlying momentum that can be found in the market.

In these cases, expert automated traders are generally looking to pair a strong currency with a weak currency, as this tends to be the scenario that creates the strongest trends and momentum activity.  So it should also be understood that these are the types of scenarios that are capable of generating the biggest profits for those using momentum automated trading system.  But at the same time, it will need to be understood that few opportunities might be present when markets are not caught in a major trend.

Contrarian Automated Trading Systems

On the other side of the coin, we have the traders that prefer contrarian automated currency trading.  This opposes what happens with momentum automated trading strategies. This is so because in these cases automated traders are actually looking to place positions in the direction opposite the trend.  To some, this might seem like a losing battle.  But if the major trend is about to end, then it will start to make more sense to place automated trading orders in the other direction.

Contrarian automated trading systems allow Forex traders to “buy low and sell high.” Therefore, it can be very profitable when used successfully.  There is risk involved when the dominant trend is not assessed correctly. But money management strategies in trade automation allow for tight stop losses in many cases.

Automated Trading Platform: MT4 Automated Trading

One of the most used automated trading software is the well-known MetaTrader 4 platform. This platform allows full customization and modification through a special coding language called MQL 4, which is the base of the MT4 Indicators.

Automated Trading Platform: MT4 Automated Trading

The MT4 automated trading allows you to set special trading rules that the platform will implement for you. This way the MT4 automated trading platform reduces the human factor when trading, which increases the profit potential in case of a successful automated trading strategy. This is why the automated trading MT4 platform remains among the best Forex software and automated trading platforms.


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