Automation technology is breaking new ground across various sectors. Take the food tech company Zomato, which increasingly uses automation to meet over a million daily orders across more than 300 cities. It’s proven more than effective. The machinery now makes up almost 10% of the company’s workforce, filling in support roles across Zomato’s customer service staff, delivery partner teams, and more.
This same technology can help you with your forex trading. As a human trader, you can’t spend all your time monitoring currency prices and exchange rates for lucrative opportunities, much less execute them all at top speed—and even the best traders can get bogged down by psychological pitfalls like bias or revenge trading. Automation software, however, is free of these limitations, and you can use this software to take your forex skills to the next level. To get you started, here’s what you need to know about using automated forex trading software.
You need to choose the right automated trading software
When starting with automated trading, it’s best to familiarize yourself with the software using a rigorous yet beginner-friendly program. The most widely known is MetaTrader 4, which you’ll find on most reliable trading platforms. It offers stellar trading robots and expert advisors that can fully automate how you analyze and trade various currency pairs. You can even customize your advisor systems and technical indicators by installing ones developed by other traders or creating your own scripts using the MetaQuotes Language 4. When you’re more experienced and want to tailor your trading software even further, consider developing one with Python, a versatile, general-purpose programming language that’s dynamically typed and has an extensive standard library. Ultimately, the first automated trading software you use should be intuitive, in-depth, and able to grow with you as you gain more experience.
You should test your strategies thoroughly
In automated trading, everything depends on the trading strategy you set for your software. While your program can take care of the execution, it’s up to you to fine-tune your chosen parameters and indicators to make the best trades. That’s why it’s a good idea to test your strategies extensively before installing them. To do this, use your chosen software’s backtesting and demo trading capabilities. Backtesting involves looking into how your forex trading strategy holds up when applied to past market conditions. Using historical market data, your automated trading software will simulate the wins or losses of your trading strategies, allowing you to assess their performance and improve them when needed. However, it’s important to note that backtesting is limited to past market behavior that may not repeat in the future. That’s why you should also use demo trading to test your strategies under current market conditions. These evaluation methods don’t use any real capital, and they’ll grant you a holistic picture of your trading strategy and allow you to perfect it before entering it into your software for real trades.
You should still monitor the forex market
While automated forex trading software promises rapid execution, you shouldn’t leave your trades entirely up to AI. The forex market still tends to fluctuate often. That means you’ll want to update your trading strategies constantly to see which one will give you the most gains. You’ll also want to watch out for black swan events like the forex crisis in Sri Lanka, which came about as a result of the pandemic and a series of unsuccessful policy decisions. These events often happen fast and can significantly affect the value of your traded currency pairs, so you’ll need to quickly change your software’s parameters to adapt to the situation.
You’ll want to stay updated with automated trading developments
Automated forex trading software is continuously evolving, and you’ll want to be on the lookout for the latest and most helpful tech for your trades. An example you’ll want to keep an eye on is Lares Algotech, which is experimenting with AI algorithmic trading programs that can analyze market dynamics and adjust to them in real-time. While adopting such features too early can be risky, you’ll want to be aware of them and prepared to take the next step for your trading outcomes when the time is right.
Automated forex trading software can help you elevate your skills and make lucrative gains. Follow the above tips to ensure you use it well.
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CALLAN WEAVER is a freelance writer fascinated with all things fintech and how it can evolve global economies. When he’s not doing research on the topic, you’ll find him wandering bookshops to look for more novels to add to his never-ending book pile.
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