Automated trading has increased in popularity in recent years as more brokerage houses have provided clients with automated trading solutions.
Automated forex trading software benefits both the trader and the broker. The trader can actively trade 24/5 on the most liquid market in the world. The broker earns more from commissions and fees as the trading activity increases considerably.
In this guide, we reveal the best automated forex trading solutions that you can use this year.
Our List of the Best Automated Forex Trading Software
Here is our list of the best automated forex trading software to consider in 2021:
What Is Automated Forex Trading Software?
The most popular MetaTrader 4 (MT4) and MT5 trading platforms allow traders to program their own trading algorithms using Expert Advisors (EA). An EA is a forex trading software robot that opens and closes positions according to preprogrammed instructions. Once programmed and back-tested on historical data, the robot is attached to a chart (or multiple charts) and trades automatically on your behalf according to the behaviour of the prices on those charts.
How Does Automated Forex Trading Software Work?
The trader must attach the robot to a chart and then enable automated trading — usually via a simple checkbox — so that the EA robot can start opening and closing positions. The robot will buy and sell, and place stop-loss and take-profit orders, according to the criteria you have set. It will also take account of any risk-management and money-management parameters so that you don’t risk more than a defined amount of money on any trade.
Key Features to Look in Automated Forex Trading Software
One of the most important things to consider is the broker’s trading account that you use. Some automated forex trading software can yield very different results when run on different brokers’ platforms. This is due to things like differing bid-ask spreads across different brokers.
Another important thing to consider is the Virtual Private Server (VPS) that is used. For the automated forex trading software to open and close positions 24/5, the trading platform must remain open all the time. This is difficult to do without a centrally hosted VPS due to power outages and internet breakdowns, but a VPS for trading typically comes at a cost.
Pros & Cons of Using An Automated Forex Trading Software
How to Choose the Best Automated Forex Trading Software for Me?
Most automated forex trading software available to the retail trader uses technical analysis to open and close trades. Therefore, one criterion is to choose an EA based on a technical trading strategy that the trader understands.
Next, the trader must look for a broker that offers similar trading conditions to the ones that were used to generate the back-tested results. Otherwise, the live performance will be much different from those results.
Finally, the trader must consider the trading style. If an EA executes a swing trading strategy based on the 4-hour charts, it makes no sense to use that EA on the one-minute or five-minute timeframes. Put simply, you should use the robot for its intended purpose.
How To Safely Use a Broker to Make Money Online Trading?“ A brokerage house is the trader's partner that intermediates the transactions and routes the client’s orders to the market. However, the broker is not taking trading decisions for the trader; it simply executes the orders it receives. It is therefore the trader's responsibility to devise (or choose) the right trading strategy and apply any risk management criteria. Such criteria include never risking more than 1% of available funds on any one trade, and always applying a stop-loss order that will close a trade at a small loss before it becomes a big loss. ”- Mircea Vasiu
Choosing the right automated forex trading software is not an easy task, and there is no one-size-fits-all solution for all traders and trading styles in all markets on all timeframes. In this guide, we’ve highlighted some of the issues involved when choosing automated forex trading software, and we’ve suggested some automated solutions for you to try.
Frequently Asked Questions
Some aspects of trading can be automated simply by using pending orders. For example, you can place a pending limit order to automatically enter a trade when a price reaches your desired level. You can place a pending stop order to exit a trade if the price goes against you, and a trailing stop order to lock in an increasing amount of profit on a trending trade.
No, they are not. It should be a top priority for a trader to check the regulation as it often comes with enhanced protection for the traders. For example, segregated accounts and negative balance protection.
MetaTrader 4 and 5 work best with automated forex trading software, but other solutions are available.
Yes. Because of stiff competition, forex brokers extended their offerings to include indices, commodities, fixed-income securities, equities, and more.
Most of the time, yes. Online trading makes it easy to find the right broker and to open a trading account. After uploading any verification documentation, you can typically gain access to your live account within hours if not minutes.
Brokers will sell you a currency or other asset at their ask price (which is your buying price). They will buy it back from you at their bid price (which is your selling price). There is a “spread” between these prices because — just like a used car dealer — the broker will pay less to buy back your assets than it charged you to buy them. It’s one of the ways that brokers make money.