If you are getting into the online trading business, but you feel a little bit lost as to where to start, this is a basic guide about online trading and specifically automated Forex trading, and if it is profitable. To begin with, let’s talk about what Forex trading is and how it works.
What Is Automated Forex Trading?
First of all, the phrase Forex stands for foreign exchange, so Forex trading is trading between foreign entities and currencies. The foreign exchange market is a global marketplace that doesn’t have any one location and is not ruled by any one government. Anyone can access this marketplace online at any time to change one currency to another.
Where Is The Forex Trading Market Located?
If you want to use automated Forex trading, you must enter the Forex platform, which is open twenty-four hours a day, but only on weekdays. Exchanges are fully electronic and can be done through investment firms or by individuals.
How Does It Work?
When you enter the Forex trading market, you can create an account through an investment firm and then begin to move money back and forth through that account. The biggest thing to look out for is currency exchange rates and when it is a good time to trade. Currencies fluctuate on a daily basis, so it is essential to make sure you are exchanging currencies on a day when they are closer together in value.
For example, one Euro or EUR usually fluctuates around being equal to 1.0 to 1.5 Dollars or USD depending on the state of the world. A great time to exchange these currencies and make trades is when the EUR is closer to the 1.0 mark of the USD. This way you will not lose as much money when converting.
Once you have chosen a currency and an investment firm or broker, they will tell you when is the right time to make trades. But this is where automation changes things. With automated Forex trading, you don’t need a broker or anyone else telling you when to make a trade because automation is already doing it for you.
Automated Forex trading uses AI to create things called expert advisors or EAs. These expert advisors serve as a kind of robotic version of a financial or stock broker except that they have a vast amount of knowledge. The EA can be used on a number of trading websites that operate forex automated trading and it will basically run the whole process for you, all you need to do is log in, install it, and program it to your parameters. If you feel unsure about using artificial intelligence to make big trades, start small by investing just a little bit of capital the first time you test the EA. If all goes well, you can slowly make your way up to big trades.
Now that you know how automated Forex trading works, let’s get into whether or not it is profitable in comparison to other methods.
Is Automated Forex Trading Profitable?
Before we get into the profitability of automated Forex trading, let’s talk about some pros and cons of the automated system.
Pros of Automated Forex Trading
One pro is that this form of trading takes out the human side of trading. No emotion is involved when your money is on the line. The expert advisor only uses data to predict the way the market is going to go and makes trades based on solid information. This makes for consistent behavior and trades. This kind of emotionless trading is seen to be more beneficial than trading with human emotions.
Another pro is that the expert advisor can pick up information as soon as it enters the web and can make trades much quicker than a human can. This means that trades can happen at any time, day or night while the market is open.
Cons of Automated Forex Trading
The biggest con of automated Forex trading is that there can be some added fees when using this technology, but that is no different from paying a broker to make your trades for you.
If you don’t know what you are doing, a con of this system is that you may program your expert advisor to do things you don’t actually want it to do. It is extremely important to read through the information in this article and do as much research as possible before you invest any capital into an automated Forex trading system. Besides this, the automation of trading works quite well when you have a good grasp of how to program it.
So, Is Automated Forex Trading Profitable?
Now, the question we have been waiting for. We have covered the what, where, and how of this kind of foreign trading, but is it worth it? Experts say that overall automated Forex trading is, in fact, profitable for a few reasons.
First of all, the speed at which the automated expert advisor can absorb information and make a trade is faster than any human trader, thus making it more likely that there will be a profit.
Secondly, because automated Forex trading is always going, it can make trades all day long, leaving more opportunities to catch openings in trade opportunities.
Thirdly, people who choose to use this form of trading and know how to optimize the technology are the most likely to get a profit over and over again.
Online trading can be tricky to understand, especially if multiple currencies are involved. In order to feel confident in trading your capital, remember to take note of the steps above. To review, automated Forex trading is the trading and exchanging between different currencies. The Forex trading market has no single location but is an open online platform that anyone can access.
Anyone who wants to set up an automated Forex trading account can do so with an expert advisor or EA. After optimizing the EA to their preferences, the trader can stay logged into their account and let the EA do the work.
Those who optimize the EA correctly are likely to make a profit, so make sure to follow the steps above to achieve your trading goals.