Understanding how forex trading works – Forex trading 101
The forex or foreign exchange market is one of the largest and most liquid financial markets in the world, with an annual turnover of trillions of USD. Forex traders exchange one currency with another in order to benefit from their fluctuating prices. These currencies are traded in pairs – for instance, if a trader is trading EUR/USD, they believe that the price of EUR will strengthen and they can profit off of it. Similarly, if a trader sells EUR/USD, it’s because they believe the price of EUR will fall short or USD will become stronger.
Most of the FX market consists of 8 major currency pairs, which are EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD and NZD/USD. Each of these markets offers great trading opportunities, but they also demand a certain level of commitment. It’s important to acknowledge that forex trading comes with a high level of risk. Mainly because the FX market is highly volatile as many factors have an impact on a currency’s value.
How to invest in the forex market profitably
If you want to invest in the FX market successfully, you’ll have to monitor political, economic and environmental news carefully – each of them can lead to market fluctuations. An effective way to skip all the hard work and get straight to the money-making part is by following trading signals or using an automated forex system trading. Forex trading signals are buying and selling indications given by market experts to help people benefit from the forex markets volatility without having to track the market and spot opportunities constantly.
Imagine you’re trading EURUSD and you want to make sure that you make the right investment at the right time. An automated forex trading system will require you to input a few preset rules, based on which it’ll automatically detect trading opportunities and make enter or exit investments accordingly. On the contrary, a forex signal will simply tell you where to invest, when to invest and how to invest. You can then decide whether or not you want to follow the signal.
What is automated trading? An elaborate overview
Automated trading, also known as algorithmic trading, is the use of special systems or software to automate your investments. An automated trading system will use algorithms to monitor the market and open & close trades based on several factors. These factors include the price at which a position is opened or closed and the timing of the trade.
According to market experts, automated trading might be the future of investments. Simply because it takes emotions out of trading, diminishes the need to keep track of the market and your investments, and can offer you a great trading portfolio effortlessly.
FXGrowth offers an automatic forex trading software that is designed with the help of market experts. If you’re in search of a reliable FX trading system, you can sign up with them and give it a try. They also offer trading signals with a positivity rate of over 70% – making them a reliable option for FX traders.
Who is Automated forex trading suitable for?
Automated trading is suitable for beginners who know the basics of trading forex but lack the expertise to efficiently apply their knowledge and detect relevant trading opportunities. By opting for automated trading, they can build a portfolio without having to climb the learning & practicing ladder. In fact, if you carefully follow the trades on an automated trading system, you can learn alot. Many auto trading service providers also offer expert support, guidance and learning tools.
Traders who want to diversify their trades
If you want to invest in multiple currency pairs at once, automated trading can make this easy for you. The forex market is highly volatile, so investing in multiple currencies at once can seem like a huge risk to investors. But, since auto-trading handles are hard work for you, you can dive into multiple trades at once without having to keep track of them.
Experienced traders who lack time
Do you have the knowledge and expertise to invest in the FX market profitable but simply lack the time to constantly track investments? Because if so, automated trading systems make trading a lot more easy and efficient. All you have to do is enter a few details to custom design an algorithm that would suit your investment style, then let the software do its job.
Pros of trading forex through an automated trading system
Automated trading can be rewarding if done on a reliable auto trading system and executed properly. Here are the main benefits of automating your investments:
- It’s time-efficient. Constantly following ongoing news, spotting the right time to open or close a trade, or even tracking your investments can be extremely time-consuming. Automated trading makes this a lot easier and significantly reduces the efforts required to invest in the forex market by taking control of your investments.
- If you’re new to the forex market and want to kickstart your investment journey, following signals and automating your trades accordingly can be a great way to do that. So, thanks to automated trading, you don’t need to be an expert to make successful trades.
- Diversifying your trades would mean having to follow multiple trades and remaining up to date with each of your investments. However, automating your trades gives you the capacity and time to invest in multiple markets without having to worry about the repercussions.
- It’s common for investors to get overwhelmed with ongoing market news and trends, and as a result, make emotional decisions rather than rational ones. Luckily, with the help of an automated system, you can take the emotions out of your investments and invest with a more calculated approach.
Cons of automated trading
- While sitting back and watching the show run by itself seems like a dream come true, for many investors, it would feel like they can no longer control their investments. Auto trading takes the decision making power away from investors and sometimes that can be frustrating. In such cases, it’s better to stick with trading signals.
- Constantly having your trades managed for you makes you dependent on computerised systems. You begin to lack the skills and expertise required to manage your investments on your own – and sometimes even the will to do so.
How to choose the best auto trading software for your forex investments
The most important aspect of automated trading is finding software that is reliable and suits your trading goals. Here are a number of tips on choosing the best automated forex trading software:
Look at the markets offered by the trading system
If you’re interested in trading in the forex market only, your priority will be finding a trading system that offers automated forex trading. Some systems only support limited financial markets; for instance, FXGrowth offers auto-trading for forex traders only. Similarly, if you want to trade in several markets through software, look for systems that allow you to do so. Interactive Brokers allow you to auto-trade stocks, options, Forex, futures and bonds.
Give the software a trial run to ensure it’s user-friendly
The last thing any trader wants is software that uses up a lot of computing power yet isn’t easy to understand. Since the automated trading system will be handling your investments, you should be comfortable using it. Look for a simple user interface and a platform that offers additional tools and support as well.
Look at the online reviews and costs.
Check online reviews for the auto trading software you’re interested in. After all, nothing speaks louder for service than customer declarations. Once you’re comfortable with its online reputation, make sure you check whether there are any costs and if you can afford it with ease.
Best automated trading platforms for FX traders
Here are a few of the best-automated trading providers for Forex traders:
FXGrowth offers automated trading through an algorithm designed by market experts. Not only is the software user-friendly, but it also comes with the support and tools any forex trader needs to invest more efficiently. The platform also offers trading signals with an accuracy of over 70%. These automated trading signals are auto-generated using an effective algorithm. You can start auto-trading with FXGrowth and benefit from their forex trading signals regularly. They offer one free trading signal every day and up to 16 signals per day for paying users.
MT4 trading platform
MetaTrader 4 is a wide user electronic trading platform that was founded in 2005. One of the platform’s best services includes an automatic forex trading system alongside copy trading and social trading. The platform is highly trusted and recognised as a reliable source for signals as well. You can download their application on your phone or desktop and sign up for an account to begin your automated trading journey with ease.
Another platform that offers a seamless auto trading experience is Capitalise.ai. Alongside several other tools and features on their platform, you can begin auto trading forex pairs with ease and convenience. In fact, their auto-trading system is designed to suit beginners as well as experts. You can use the platform for free through InteractiveBrokers and benefit from their additional services that include podcasts, news updates and trading support.
Final thoughts – Begin your automated forex trading journey today
While a forex automated trade system sounds like the perfect escape from all the hard work involved in investments, it comes with a certain level of risk, and you can’t simply rely on it 100%. The first and most important step for you as a trader is to look up the best automated forex system trading that suits your investment priorities. After that, you have to pick and choose an effective trading strategy and pre-set rules that you would manually apply to your trades.
The system will then use your pre-set rules to customise an algorithm for your automatic trades. However, ensuring that you input the right set of rules and choose an effective strategy is essential. You can seek help from expert trading signals or copy trade with other experts in case you lack experience as a forex trader.
Our preferred automated forex trading system is FXGrowth as they’re reliable and user-friendly. Plus they offer highly accurate forex trading signals alongside other tools and services.
Automated forex trading – FAQs
✅ Is automated forex trading suitable for beginners?
Automated trading allows traders to automate their investments with the help of algorithms and software. Though these systems require investors to input pre-set rules which the software then applies to manage their trades. If you’re interested in auto trading but lack the knowledge and experience, you can go for automated copy trading. Copy trading is the act of copying an expert trader every move to benefit as much as them, without having to put in any efforts of your own.
😎 Is auto trading safe?
There are many automated trading software out there, each of which has its own set of pros and cons. As a trader, it’s important that you choose an auto-trading software that suits your investment needs. You can ask yourself the following questions: does this software support the financial markets that I’m interested in? Does the software offer customer support? Is the software free or affordable for me? And lastly, is the software user-friendly?
🔥 Is it a good idea to automate your forex investments?
The forex market is highly volatile and forex prices are constantly fluctuating. The main reason behind this volatility is that several factors have an impact on currency values. These factors include environmental disasters, economic news and political news as well. In order to successfully invest in the forex market, you must carefully follow the market trends and news updates – which can, of course, be overwhelming for many investors. Hence, copy trading, social trading, mirror trading and automated trading is often a good choice for forex investors.