The use of automated trading for currency market trading is becoming increasingly popular and profitable for many people。With such a comprehensive trading platform, you can build your own algorithmic models or use "robot" signals provided by third parties。

Why Automated Trading Is So Popular？

The appeal of automated trading is fundamentally due to two factors。The first is effective-traders can systematically trade and make profits, and the second reason is that it keeps getting easier。

Hedge fund MAN Group estimates that 34% of total hedge fund assets under management ("AUM") are currently managed by funds that run automated procedures.。In cash terms, total assets under management are approximately $1,019 billion.。

The world's most popular trading platform for retail customers is MetaTrader's MT4 system, which is the platform of choice for independent traders seeking automated trading。

History of Automated Trading

Automated trading entered the market at the end of the last century.。At first, it was carried out through a semi-automated method. Any computer that obtains data from the real-time market can obtain market information, process the data faster than humans, and generate buy or sell signals。

In the early days, these signals required human intervention, but now every stage of the entire process is automated, including trade execution。

Benefits of Automated Trading

Many of the obvious advantages and disadvantages of automated trading are two aspects of the same coin。In fact, it does not involve interpersonal interactions, which can be positive or negative, involving several aspects:

• Trading procedures - eliminates the possibility of emotion-driven human intervention。
• Data-driven - The human brain is born to make trading mistakes, beginners often trade at a loss in the hope of being profitable again, and systematic trading is entirely model-driven.。
• Reduce trading errors - Manual trading has operational risks, such as "hand slip" errors when booking transactions。
• Lower intensity - once your model is up and running, you may find that you are able to take a more laissez-faire approach to trading。

Disadvantages of Automated Trading

Fostering transactional psychology requires a critical approach to any "sure thing."。Automated trading is no exception, and it's important to understand some of the challenges:

• System crash-technological advances have made this less likely, so what happens if your trading signals get out of control。
• Crowded Trading - If everyone uses the same data, what happens if millions of other traders follow them。
• Space Race - Some systematic trading strategies require a high level of technical knowledge and significant hardware investment。
• Other costs - All strategies require a clear cost analysis that can overlap if you charge additional fees to third parties and data providers。
• Slip - that is, the transaction is not executed at the price predicted by the model.。The market is a dynamic environment and trade orders may not reach expected levels。
• Fundamentals - can technical analysis alone yield returns?？How data points such as moving averages respond to sudden changes in "fundamentals" such as geopolitical events and natural disasters？
• Paradigm Shift - This is a major shift, trading based on historical data alone does not guarantee future returns。

How Automated Trading Works？

Automated trading involves the use of computers to analyze market data such as prices and then turn that information into trading ideas。It involves the use of procedures for executing trades in accordance with preset entry and exit trading rules.。

These processes can be done manually, but system-based analysis is much faster。This means that more variables can be considered, because when all the information is collated, the price may still be at a level that confirms that a trade is still a good idea。

If the price rises to a higher level at the same time, it is of little use to manually calculate multiple variables and conclude that the buy trade is appropriate。

Statistics frequently used when developing automation models include:

• Moving Average
• Fibonacci retracement level
• Bollinger Bands
• Volume - The higher the volume, the greater the weight of the signal.
• Support and resistance levels - for example, intraday lows and highs
• smooth similarities and differences moving average
• Oscillator

The above list is just an example, some models contain large-scale data。The basis for most of the above measures is that prices may rise excessively and therefore may fall back at some point。Other models capture momentum signals and try to hitch a ride on price movements。

What is Automated Trading?？

If you've ever used an online broker and tested a demo account manually, you'll understand the life cycle of trading。

With automated trading, in fact, most of the time you spend monitoring trades is checking your portfolio and tracking the profit and loss of positions。

It is important to remember that you still need to check your trades。In automated trading, the probability of failure is low, but the consequences associated with it are significant。

The process of developing a model and connecting it to a trading platform is worth studying in itself。The fact that brokers offer "wizards" and other such tools to help you get your model up and running gives you peace of mind。

What are some good tips for starting automated trading?？

Following the advice of professionals, the several stages of starting automated trading are:

• Idea generation
• Research
• Backtesting
• Simulated trading 
• Optimization 
• Demo Trading 
• Execution 
• Optimization 
• Real-time trading 

Optimization is a repetitive phase that involves returning multiple phases and reconfiguring the transaction model based on its performance。It is worth noting that "over-optimization" is a common trap for traders。"Perfect" models may be an ideal way to trade historical data, but are of little use when trading future market conditions。

A model will not be approved for the next stage just because it can be profitable, and a project that can make money but without a valid reason can be very dangerous to apply for。

Implementation is the process of applying models in a real-time, real-money environment。

There are many small differences between simulated trading systems and real-time trading systems, which may mean that models running in simulation mode are not suitable for real markets。In the implementation phase, the transaction is small and will only be scaled up after each level of optimization is completed。

Introduction to Automated Forex Trading

There are a large number of third parties and internal service providers in the market who want to offer you automated trading systems。

Some good places you might want to start are:

• MetaTrader - MT4 and MT5 - Long-term market leader in automated forex trading related services。
  
• EA Trading - part of the MetaTrader suite of services, where users do not need to develop and apply their own models, but instead get automated trading orders from third parties。
  
• Documentary Trading - Automatically apply trading signals from other traders to your account。

Conclusion

There is a delicate balance between trust models and manual intervention, and many of the skills involved in successful robot trading involve correct operation.。

The staff of a large systemic hedge fund will sell you the idea that the model is trustworthy.。OUTPERFORM MARKET RETURNS MAY ATTRACT INVESTORS, TRADING RECORDS SHOW。

On the surface, smart people seem to be enjoying making money, but it's hard to know what's going on behind the scenes。This doesn't mean that automated trading doesn't work, it's just that you need to know how it works for you。

Being too greedy can cause your own model to "over-optimize," or cause you to fall into the hands of unscrupulous third parties offering something "too good to be true."。

Developing and testing models in a demo account is a very valuable process in itself。Since a large part of the market uses automated trading technology, even if you use a manual "discretionary" method, knowing the effect of another method will benefit you。