• Welcome to your Forex Forum - share your currency trading strategies, news & tips!
    Sign up Log in

Using Automated Forex Indicators in FX Trading

Dave

New member
Automated trading systems are not new to the forex trading world. Automated trading allows traders to fix certain rules for the entry and exit of their trades. Once these inputs are executed, the system can automatically open and close trades on behalf of the forex trader. Many new forex traders or traders who do not have enough time to invest often resort to automated trading. Many trading platforms record nearly 70 to 80 per cent of the trades in the stock market in the US to be automated. And the scenario is no different in the forex market either.

Establishing the automated trading rules and forex indicators

The trading strategies in automated forex trading are based on certain algorithms, and the algorithms rely on forex indicators. The forex indicators that the artificial intelligence in the trading platform uses are chosen from a commonly available list of technical indicators. Based on these technical indicators, the platform builds a set of rules for trading automatically.

The forex indicators the automated trading platform will choose may be as simple as a 50-day simple moving average (SMA) or an SMA crossover. For instance, the trader can set a rule that when the 50-day SMA crosses over above the 200-day moving average on a 10-minute chart on MT4, a long position trade will be entered.

The forex trader can also set other preferences such as limits or trigger points when the trade has to be entered.

While some traders prefer to use the platform's default indicators and algorithms, others prefer to customise their algorithms, strategies, and indicators.

Customising your forex indicators and strategies


Forex traders can also work in close contact with certain expert advisors or EAs. EAs are highly skilled professional traders as well as skilled at writing algorithms. These expert advisors can help traders build their own strategies and create their own automated forex indicators for automated trading. Customising the forex indicators and strategies may be a little more demanding than using the default settings of the ‘wizard’ on the platform. But it also offers more flexibility and control.

Once the rules for automated trading have been set by the trader, the system will automatically track the market and look for buying/selling opportunities based on these inputs.

Choosing a forex indicator for automated trading on MetaTrader 4

MT4 has trading robots as well as indicators that any trader can easily access and use without in-depth knowledge. A trader does not need any programming skills to set these automated trading algorithms to work either.

MT4 has a free source code library of robots and forex indicators, named Code Base, built into the platform itself. With Code Base, you can access more than 2000 forex indicators and 950 robots. You can download an application from Code Base and apply it to automate your trading immediately. Code Base also has more than 300 scripts, which are smaller applications meant for automating one-time trading functions.

Advantages of automated forex trading


There are several advantages of automating your trading activities, particularly if you are not a seasoned trader yet.

Lower emotional investment


In forex trading, keeping your emotions in check is extremely essential. It is difficult to guarantee profits in trading, and being too emotionally charged when dealing a trade can lead to more frustration if you lose. Automating the entire process of opening and closing a trade means that you will be less emotionally invested in it. As the system takes care of everything, it prevents you from overtrading or making wrong decisions out of frustration.

Maintaining discipline in your trading activities


Since you set the rules and allow trades to be handled automatically with your interference, a sense of discipline is maintained in your trading strategy. With manual trading, you tend to change decisions and strategies frequently when the market is volatile or when you experience a big win or loss. Automated trading ensures that you stick to your trading plan and this can help your gain in the long run.

Generating orders faster


In automated trading, since the computer is generating the orders as soon as the criteria are met, the trade can be entered immediately when the market changes. The difference of a few seconds can sometimes make a big difference in forex trading. Not just entering a trade but other orders such as stop losses and profit targets are also generated simultaneously when the position is entered. So your chances of minimising losses also increase.

Conclusion


Trading with automated forex indicators can be very convenient and productive for new forex traders. But you also need to be aware of manual trading techniques and strategies so you can make better decisions when automating your trades.
 
Last edited:
Top