What is AI forex trading?
AI trading or artificial intelligence trading is essentially the buying and selling of assets without any human interference. Software is used for trading on your behalf, following the parameters put in place to follow certain conditions in the market. AI forex trading is specifically for the forex market, where automated trading is more commonly used by traders new and experienced.
Artificial intelligence in trading has the ability to analyse millions of potential scenarios in a second and find the right opportunities that could result in a successful trade. The AI system will look at historical data of an asset and how it moves in the market and decide what to do based on this information.
Retail traders are becoming more familiar with forex trading AI algorithms. As platforms are developing, technology is also becoming more advanced. However, major financial institutions and global retailers have access to expensive technology and software systems that give them the upper hand; including advanced quality AI trading bots that will decide for you, based on what you tell them to do in the algorithm.
Even with the industry bias, many online platforms allow you to trade forex using automated systems. Although not as advanced as their high tech forex trading AI bots, automated trading is the future of forex trading. It encourages forex brokers to improve their user experiences with these new technologies and track the users trading performance in real-time. So if there is a problem with a transaction, you can identify it and fix it instantly.
How does AI trading work?
As mentioned, forex trading AI is centred around pre-set algorithms that allow users to trade autonomously, creating decisions based on historical data in the market. If you’re considering using this system, you will have to purchase a trading algorithm that someone else has designed. It is software-based, and if you’re someone who has experience and expertise in algorithm making and the funds to do so, you may be able to program it yourself. But the system is entirely complex, and it’s common for traders to buy from a reliable source. Some online sites may offer you free trials or demo accounts to give the forex trading AI ago.
The software is designed so that the technology will perform the trades when certain conditions and parameters are met. The main focus of AI trading is executing orders that follow the instructions you’ve already set. Variables are also considered, such as the asset price and the price range in the forex market. The time of day, what the market looks like when it’s busy compared to quieter times and the trading volume. As the systems are so complex, algorithmic trading computers generate a bulk of the trades, including around 50-70% of equity market trades, 50% of the treasuries and 60% of futures traders.
AI Trading Signals
AI forex trading can be seen as a broad term as it covers a range of trading techniques such as automated trading signals. Platforms like FXGrowth focus on allowing customers to experience forex trading AI systems through their automated trading signals. The algorithm is set to scan the forex market and find opportunities to execute trades and then sends these signals to users in real-time through messenger apps, like WhatsApp and Telegram.
AI trading examples
To help you understand AI trading a bit further, we’ve included an example of an AI forex trade if you decide to purchase an AI software bot.
Opening the position
The forex trading AI has been programmed to place a buy order on the forex pair GBP/USD when the technical analysis method hits a specific level. In this instance, when the Fibonacci Retracement reaches 78.6%. The AI software will then use a ‘what if’ process to look at the history and data and develop the different steps it might take next at that level.
Once the condition is met, the buy order on GBP/USD is placed. The AI will also install some stop conditions like stop-losses to ensure the security of the users’ returns. The parameters will then instruct the AI to close the trade if GBD/USD increases by a certain number or decreases by a certain number of pips. They know that this range acts as a safety net for the clients’ funds.
Closing the position
After a couple of hours of the position being open and trades taking place, the GBP/USD increases by the number of pips above the range set, causing the trade to close automatically. From this example, we can see that the AI trading software could place the order without any human interaction because it was going off of the instructions set and scanning the historical data of GBP/USD. If your chosen forex trading AI is programmed correctly, it can scan all major currencies like this. It will follow the same strategy based on what it already knows from the historical data and result in more successful trades.
Choosing the right AI provider
It’s essential to research before purchasing a forex trading AI system from any website that offers a competitive price. In this review, we looked through different platforms and found that FXGrowth is an excellent example of automated trading. Their ethos is to provide fast performance and trusted financial services to their users. It includes resources that help develop the users’ forex trading skills through AI forex signals and expert advice. They also have a reliable 24/7 customer service team that provides support for all queries.
Advantages of AI trading
Forex AI trading is a great system and comes with an abundance of advantages. Some of those we listed below.
As a beginner trader, you may want to invest a lot of your free time in forex trading because you want to develop your skills as quickly as possible. Similarly, if you’re a more seasoned trader, you want to make the most of those trading opportunities before the session ends. But, there’s only so much time as humans we can invest before we need to take breaks or risk making mistakes that are detrimental to our trades. Using a forex trading AI instead will eliminate the need to be scanning the markets for long periods when it can do it for you and increase the opportunities to execute successful trades over time.
Trade any marketplace
You can trade any marketplace simultaneously with forex trading AI. As humans, it would be pretty challenging to stay awake at all hours of the day and night to trade during the London Stock Exchange opening hours and then the Australian Securities Exchange in a completely different timezone. At TradersBest.com, we would recommend trading marketplaces in your local timezone to avoid fatigue which could negatively affect your trading abilities in the long run. Thankfully, AI trading systems have access to as many markets as you wish 24 hours a day, seven days a week. They are allowing you to focus on other things while the algorithms do their job.
As humans, one of the reasons why traders lose money is our emotions affecting our trades. We could hold onto a position for too long or rush to close the position. We act out of impulse rather than looking at what information is presented to us. It can be a concern for new forex traders, especially those who struggle to accept that sometimes this is a part of trading risks, and it can happen to anyone. There’s also the response to this loss, with traders trying to win back what they lost by making more mistakes and doing more bad than good to their funds and confidence in trading.
Luckily forex trading AI systems aren’t overwhelmed by emotions and make for successful trades in the financial markets. Their software is based on predetermined conditions, so even if the trader feels like they want to intervene, the buy and sell orders are placed to reduce where moments human nerves take over.
All trading skill levels welcome
In this review, we found forex trading AI bots and systems are perfect for traders of all skill levels. The software gives you access to the financial market without any experience as it is automated, so it essentially does a lot of the background research for you. However, it is a good idea to understand how the forex market works to better your trading skills in the long run. As a more experienced trader, you’ll be able to analyse a more significant amount of data, transferring your trading skills and expertise to several other marketplaces – such as crypto trading or stocks.
Disadvantages of forex trading AI
In addition to the benefits of AI trading, we’ve listed some key disadvantages to look out for when considering this method of forex trading.
Manual attention is required
Although most forex trading AI is automated and algorithm-based, someone needs to adjust the algorithm to fix any underlying issues if necessary. Or someone with excellent coding knowledge. Depending on the algorithm, it might not always go smoothly, and there needs to be a middleman to prevent this from affecting the user trading process. In addition, the software only works when specific conditions are met. If, for example, the latest financial news has been released and there is a drastic change in the price, you’ll need to intervene and adjust the parameters in your AI system’s price range to accommodate the changes.
The AI system is only as good as the underlying software, so if you chose one because the price was appealing and offered what many others can’t, it might be too good to be true. It’s essential to back check your forex trading AI to avoid any disappointment in the future. The AI system has to be designed effectively to ensure it can work in the marketplace or risk losing money.
Time dedication necessary
Thankfully, AI forex trading reduces the amount of time we need to spend monitoring the markets. However, that doesn’t mean we can forget about our trades entirely. It is essential to know how your positions are performing, their progress, or if something needs to change in the algorithm. Forex trading requires dedication to make the most out of your trades. As your skills develop, you’ll naturally want to spend more time on them because you’ll have an understanding of what forex trading strategies work and what could be improved on in the long run to increase your chance of greater returns.
AI trading risks
In general, trading in the financial markets comes with many risks, especially if you’re new to trading. Some key points to consider are mentioned below.
AI Trading Provider Scams
Thousands of online trading platforms claim to be the best and offer the most competitive rates to their customers, guaranteeing profits and easy executions. It is vital to take these exaggerated claims with a pinch of salt before spending your money because it could be a scam. You have to ask yourself why an AI trading platform would share their valuable software with the public for a competitive price unless there’s something you’re not being told. That could ultimately lead to a risk of losing your funds. We suggest working with platforms like FXGrowth, that focus on prioritising the customer’s development of forex trading through tools and automated trading. They work with reliable brokers to ensure your funds are safe.
There is no guarantee that your forex trading AI will always make consistent profits for weeks and months at a time. Financial markets, including forex, change rapidly at any given moment, based on outside influences and changes in the economic calendar. It is necessary to adapt your AI consistently to avoid any losses. Automated trading is not entirely autonomous as it would make out to be because you’re still required to dedicate time to ensure the strategy is still working efficiently or risk falling behind due to a lack of changes.
Conclusion – more evidence to support AI trading
Overall, we at TradersBest.com think the forex trading AI method is an excellent tool for traders. We suggest you give it a go as technologies are constantly developing to improve AI systems for their users. Although you may not have the high tech resources of prominent financial industries, you still have many platforms that offer AI trading techniques and tools to help you on your trading journey.
Platforms like FXGrowth are valuable resources that allow you to use automated AI trading signals to assist you on your trades and support you in forex. Whether you are a beginner or more experienced, forex trading benefits from automated AI trading and will continue to do so in the future, so it’s a great idea to get onboard.
Forex trading AI FAQ
❔ What is automated trading?
If you’re starting to understand the financial markets, particularly forex, then a forex trading AI might be right for you. Our review looks at why it is so important to consider one when thinking about executing trades. It allows you to trade 24/7 without taking up the majority of your time. It promotes trading flexibility as you can branch out into other financial markets and transfer your techniques onto those.
💸Is AI forex trading profitable?
Trading the forex market comes with risks, especially if you’re a beginner. We recommend in our review to consider using a forex trading AI to help make decisions for you. As humans, we sometimes let our emotions cloud judgements, negatively impacting our trades and resulting in losses. But luckily, automated trading techniques help remove the emotion and base executions on data and lead to more successful trades.
🌐 Will AI take over forex trading?
Forex trading is one of the most liquid financial markets available worldwide. There are constant technological developments to improve the performance of forex trades. These include many online platforms introducing a forex trading AI option for their users. It’s a great choice for beginner traders and more experienced traders who want to trade multiple markets simultaneously and reliably.