Forex auto trading is defined as a trading strategy in which the buy and sell orders are placed by an automated system which is fed into the system using a program for foreign exchange market. These orders are finally sent out into the market for execution when the criteria set for the same is met. The active traders make use of auto trading system to form, buy and sell Forex signals that enter and leave positions frequently than any average investor. The technical analysis of the market causes the auto trading criteria to differ greatly.
Forex auto trading dates back to 1999 when the online trading in retail emerged. This took place in this year when the entire internet based companies formed the retail Forex platforms which allowed them to quickly buy sell in the Forex spot market. Forex auto trading is of two types:
Fully Automated Forex Trading also known as robotic Forex trading is very similar to black box trading where the computer algorithm is responsible for deciding the time, price and the quantity that will initiate the order in an automated way. The users have very minor role in this that is tweaking the program and the control of everything else is handed over to the program.
The Signal Based Forex trading is the one in which orders generated by the system is executed manually by the trader.
The automated Forex trading system can make work easy and also generate more trades in each market compared to the human trader. It can also multiply and replicate the same trade in many of the markets and in different timeframes. It is free of the bias that may result due to human emotional and psychological conditions. With the help of the Forex signal provider models the traders will have the opportunity to know the signals that were successful previously and may also get advice and strategies to be followed to get continued accurate profitable trade. There is no need for a trader to know everything about Forex trading and can use already existing system and strategies and thus is available to many people.
One of the major disadvantages of Forex auto trading is that it is unregulated and thus invites a lot of scams. Since auto trading has brought Forex to general mass it has exposed more and more people to frauds. NFA and SEC of USA have put forward some strict rules to prevent fraudulent cases.