Automated currency trading is very popular amongst many new traders. It does sound very appealing to have an automated forex system that you can just set and forget and have it make money for you. Unfortunately, most automated forex systems do not stand the test of time and eventually end up losing money, often destroying the hopes and dreams of the new trader.
Automated Forex Trading Software
The most common Automated FX Trading software is undoubtedly Metatrader 4. Many currency trading firms support the Metatrader 4 platform and will let you try a demo account to test your automated strategy.
Metatrader Expert Advisor
Metatrader 4 runs a piece of code called an Expert Advisor or EA. An EA is an automated trading strategy. There are many EA’s available to download online. If you are able to program, you can create your own EA based on your trading strategy.
Alternatively there is Tradestation, this is often used by more advanced traders and there is a monthly fee. To open an account with tradestation also requires a much higher minimum than many of the smaller brokers.
Curve Fitting
Most automated systems are specifically designed to fit an equity curve based on historical data. While this is good in theory, it is often the case that when these strategies are forward tested, the results are very different to the backtested results.
Conclusion
In conclusion, most automated forex trading systems fail, just like most forex traders fail. This is unfortunate, but true. It is just as important to test an automated strategy on a demo account for many months as it is a manual strategy. Sometimes automated strategies can be implemented along with manual strategies.
