Automated trading is the practice of having computer programs (called "scripts," "algorithms," "bots," "expert advisers," or "anything else") carry out a trader's predetermined trading strategy. Every major player in the capital markets uses automated trading solutions. Trading algorithms are useful for a wide range of traders, such as retail FX traders, hedge funds, asset managers, banks, market makers,  crypto traders , and futures and options traders. Visit MultiBank Group

Now, anyone in the forex trading community can easily make an algorithm for an automated trading strategy. Humans can't process even a small amount of the information that a modern computer can because of bias, physical limitations, and a lack of computing power. Many other industries are automating a lot of their processes to increase output, and trading firms have done the same thing. 

 

Some of the most common motivations for  fx trading strategy  automation are listed below.

 

Automated Trading Eliminates Emotions

 

Forex robots eliminate human error. Humans have hundreds of biases that cloud judgments. The disposition effect is a well-known trading anomaly. People dread losing more than they like it, according to the disposition effect. To avoid a loss, traders will prefer to close a position at break-even or a few pips in profit. Some traders don't want to get out of a losing position because they hate losing and are hoping the market will change. Even if they only make a few cents, they'll feel like winners.

Traders who have the disposition effect tend to get out of winning positions too soon because they are afraid of a pullback and will lose if they don't. Let investments that aren't making money lose a lot and close positions that are making money too soon for the worst risk-reward ratio. Automated trading tools help traders control their emotions. A  forex trading strategy  that is done automatically can stick to a strict risk-to-reward ratio and only care about following the rules.

 

Humans Process Limited Information

As financial markets span all time zones, there are always chances, especially in FX. Some traders use systems to look at many different pairs of currencies and types of assets to find long-term trends. Other traders use dozens of technical analysis indicators in their systems and wait for a signal. So much information is tiring. An automated trading solution, unlike a person, can take in information at the same time and make decisions in split seconds 24 hours a day. A  forex trading bot  can do more than a human. Know more forex time zones

 

Ignore Market Sentiment and Fundamentals

 

As a trader, you'll track economic and geopolitical news. Your market outlook could be changed by good news about COVID-19 vaccines or bad news about more cases and lockdowns in New York and London. In fact, the market almost always prices in important news, and the price shows how people feel. This is true for smaller timeframes. In favor of technical and price movement,  forex trading algorithms  might ignore how people feel about the market and its fundamentals.

Economic news events, which can have a short-term impact on the market, are unknown to automated trading systems. A bot may not understand the context of short-term volatility and misinterpret price action. So many automated trading systems ignore high-impact news announcements.

 

The bottom line

 

You'll be happy to know that there are many open-source tools and guides that can help you learn how to trade automatically on the  forex market .