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Automated Forex Trading Software: The Role of Robots & EAs

Forex robots and Expert Advisors are scripts that are coded with automated forex trading strategies.

The primary way to use automated software is to import these scripts into a forex platform such as the well-respected MetaTrader platform. Many robots and EAs develop using the Metaquote MQL language and deploy on both MetaTrader 4 (MT4) and MetaTrader 5 (MT5).

The automated forex trading software can perform trading operations once imported into the trading platform, some with minimum trader intervention according to the algorithm’s pre-set conditions.

Are Forex Robots and Expert Advisors the same?

Forex robots and Expert Advisors are both very similar types of automated forex trading software. Both are involved in the analytical part of a trade. Both undertake market analysis including charts using their internal algorithms and technical indicators to find high probability trades’ entry points.

There is one crucial difference. A forex robot will perform trades without the need for manual sign off. An Expert Advisor is just responsible for generating trading signals, advising you if they think you should trade but not placing a trade for you. Forex robots automate the full process from trade signal to trade placement with no trader intervention.

The Main Features of Expert Advisors and Forex Robots

The algorithmic trading programs coded into EAs and forex robots are often capable of performing varying functions.

Except for automatic order placement, which is limited to forex robots, they share the following functionality:

Alerting the trader about market events
Risk control via pre-settled money management policies
Monitoring the compliance of a strategy concerning market conditions
Place orders to trade according to specific conditions
Opening, closing, or partial close of market orders according to the algorithm

Video Insight

An excellent video discussing whether you should trade with automated forex trading robots:

The Advantages of Automated Forex Trading Software

There are many pros of forex trading by robot and the most important are the following:

24/5 trading: A robot for trading forex will automatically enter and exit forex trades during a specified period if that is part of its programming. It means a trader does not have to be present to manage the trade placements. It could allow 24-hour trading at high volume, which is not possible for a human being. It reduces the chance of missed trading opportunities that a human trader may encounter due to physically being unable to trade. Many traders chose to use forex trading bots as their sole trading method, while others will use it as part of a broader overall strategy.

Forex Robots remove human emotion: Even disciplined traders working within a robust forex trading system can be susceptible to placing trades that may not align with strategy rules. Times of high volatility or chasing a loss can see traders who place manual trades that do not follow the logic, incur large trading losses. Automation removes psychology from trading with a focus just on following a strategy.

Backtesting automated forex trading software: To get an insight into how profitable automated trading systems are depends on the strategy. It is critical to undertake a backtest of the automatic trader software and have a robust money management system in place from the onset. Backtesting is essential for getting a better idea of the robot’s performance, including risk versus reward and other variables and indicators. However, good your strategy, without backtesting and money management in place, you will fail. Get it right from the beginning. Below is an example of a robot strategy backtest:

Screenshot of a forex robot strategy backtest

The Disadvantages of Forex Robots

Using a robot for forex trading does have its disadvantages; however, these are starting to be addressed as more advanced EAs come onto the market and lower cost and faster access to FX trading.

Narrow trading conditions: Forex Robots work best with a single currency pair and in markets trading in a limited range. Volatile forex markets with large trading ranges see more mixed results. A small number of sophisticated EAs are incorporating increasingly complex algorithms with dynamic features, including recognizing when forex market conditions are becoming more volatile and adjusting for it. Forex Robotron is a sophisticated robot. For example, it has a dynamic stop loss and close profit feature. When this is activated, as soon as an open trade starts to lose money, the position is closed, which overrides the default stop loss position.

The requirement for a VPS server: The only downside to using robots is the need to leave your computer on if you want a robot forex trading continuously, and this requires a reliable server, which costs more. Using a VPS or Virtual Private Server instead of lower-cost shared hosting is essential to trade forex reliably lowering the risk of glitches or slow connections, which can affect trade placements.

Who Needs Automated Forex Trading Software?

A forex robot can be employed by all forex trader levels, from the beginner to the professional trader.

A beginner may rely on a robot to generate regular profit as they learn how to trade. In contrast, using a defined trading strategy, a professional trader will employ a robot as an accompaniment to their trading system. Professionals often tend to use automated software to generate trade signals but will decide whether they will place the trade.

Do Forex Robots Work?

A Forex robot can work well if it is employed correctly. A Forex robot should be considered as a tool that identifies market trends and generates forex trading signals that you, as a trader, can choose to act upon. It is the true definition of an EA, where you have the final say if you want to place that identified trade.

Where you choose when to trade means the EA is an extension of your trading system where settings and parameters are aligned as closely as possible to your strategy and currency pairs traded.

To employ a robot correctly does require an underlying knowledge of forex trading. Beginners who use fully automated robots to execute trades are less likely to see the full benefits of employing a robot unless they get trading experience through backtesting and practicing using a demo account.

How Much is A Forex Trading Robot?

Forex robots are traditionally available for purchase for a one-off fee, which offers lifetime updates. Prices vary from below $250 for long-established robots like WallStreet Forex Robot 3.0 to over $500 for Forex Flex EA. One of the few forex robots that retails on a subscription basis is Forex Real Profit EA. The complexity of the algorithms often dictates the price. Robots that include dynamic features that can adjust to changing market conditions tend to be at the upper price level. Most reputable developers will offer a 30 or 60 day money-back guarantee.

Some developers are now starting to offer automated software on a subscription basis. The merits of this from both the programmer and the user perspective is it allows ongoing development of the robot, making sure it continues to trade profitably by continuous review of built-in algorithms. Forex Real Profit EA is available on a subscription at a cost of $199 a year.

What is the Best Forex Trading Robot?

There is a multitude of forex trading robots available on the market, particularly compatible with the MetaTrader trading platform. Reputable resources that verify robot performance include MyFXbook. We have also researched and created a list of the top Expert Advisors according to a strict set of criteria to help you undertake due diligence and make an informed decision to finding the best forex robots to fit with your trading system.

At Axcess FX, we consider a low drawdown the most vital metric to gauge a robot. Drawdowns are the fall in the capital on your forex broker trading account following losing trades in real-time trading. It is the calculation of the difference between the relative peak in trading capital and the relative trough in the capital and is represented as a percentage.

screenshot of verified performance data on myfxbook — **A screenshot of verified performance of a forex robot on MyFXbook**

Final Thoughts and Conclusion

If you are new to forex trading and are considering automated forex trading software, try and build a knowledge base first, including defining your possible trading strategy and style.

Remember, experienced traders still want to maintain control and a more hands-on approach to forex trading and use an Expert Advisor to identify trade opportunities as part of a trading system, with manual trade placement as a preferred step.

Related Resources

Forex robots compared to copy trading and forex signals

Written by Chris Gillie

Chris Gillie is the founder of Axcess FX, a forex software review and research website. He is a former investment banker who worked in FX Sales on the UBS London trading floor. Chris has been using forex trading software as part of his trading set-up since the late 2000s and the embryonic days of MetaTrader and the MQL coding language.

Trading Forex in 5 Steps: The Dummies Guide

Forex is one of the fastest moving financial instruments meaning the forex market is volatile and unpredictable and a daunting place if you do not know what you are doing.

As a beginner, you must accept that you will need to learn the basics. Here are the five steps required to start trading the forex markets proficiently in our forex trading for dummies guide.

1. Get a Basic Forex Education

Learn the basics. There are plenty of online guides, forex tutorials, and courses available for those starting forex trading. Substantial learning to trade resources are available online including Babypips.com, Investopedia and thebalance.com. Forex.com has excellent educational tools to help you trade, Dailyfx.com provides a highly recommended guide for beginners and Forex Mentor Pro offers a full suite of tools including live trading sessions to teach beginners how to become a profitable trader at an affordable price.

At the start, you need to understand the fundamentals of the forex market, how forex quotes work, and the major market participants.

Forex market fundamentals

Currencies like stocks can be freely traded. The key difference is currencies trade Over The Counter (OTC) between a buyer and seller and not on an exchange, like the NYSE as stocks do.

The forex market trades around the clock, 24/5, throughout three major trading sessions: the European, U.S, and Asian session, centered around London, New York, and Tokyo. All three trading sessions overlap, providing 24/5 coverage from the Sunday evening Asian trading session until the U.S. trading session’s close on the following Friday evening. The London and New York trading session is the most liquid where spreads are the narrowest.

How do forex quotes work?

You cannot trade one currency in isolation; it needs pairing with another currency, creating a ‘currency pair.’ A currency quote reflects the first currency’s price in terms of the second currency in the pair. If GBP USD (sterling versus us dollar, also known as Cable) is trading at 1.3500, it means that one GBP will purchase 1.3500 USD.

Currency pairs quote down to four decimal places. The final decimal represents the smallest increment that a currency can change in price and is known as one pip. Retaking our GBP USD example, if the currency pair increases from 1.3500 to 1.3550, it means a rise of 50 pips, and a forex trader will express the amount of profit (or loss) in terms of pips.

Who are the primary forex market participants?

Before the advent of the internet, the foreign exchange market was dominated by predominantly institutional participants such as major banks, large international companies, central banks, and investment funds.

With the advance in technology, the retail investor has now joined the big players in the forex markets as online forex brokers provide low-cost market access with tight spreads through their trading platforms. Retail foreign exchange is continuing to grow as small forex traders take advantage of trading anywhere they have a device, whether pc, tablet, or mobile with internet connectivity.

2. Raise Your Knowledge to The Next Level

This second step should start to include learning about technical and fundamental analysis and an understanding of both manual and automated forex software, including Expert Advisors and charting tools and packages.

This step also includes researching different types of strategies as the aim is to build your forex education to a level where you can start to mold a trading style that plays to your strengths.

There are four broad types of forex trading strategies, which are position trading, swing trading, day trading, and scalping. Position trading is taking a longer-term strategic currency position. Simultaneously, scalping is the shortest strategy with currency trades sometimes opened for just seconds to take advantage of only a few pips of profit. Choosing a preferred strategy may come down to your character, with an analytical thinker choosing to use fundamentals as a basis for taking out a long-term view using position trading.

To gain all the essential knowledge to start trading, it is vital to watch tutorials, participate in online courses, and follow trading forums. Forums have developed useful ways of tutoring about the basics of currency trading for dummies and showing beginners instant trading results. Forex Mentor Pro has an excellent active member forum that you get access to when you sign up for an affordable membership and learn how to trade profitably. Forex Guy also has a good forum and Second Skies Forex offer a 12-chapter trading forex for dummies course.

Particularly, when looking at forums, try and pay close attention to what successful forex traders are doing and what you can take from their strategies and techniques relevant to you and from which you can mold a system around.

currency charting software on a pc screen

3. Open An Account With An Online Broker

To trade Foreign Exchange, you will need an online trading account provided by a reputable brokerage. Any online broker selected should include the following considerations:

Consider an ECN broker

Ensure that the broker uses ECN (electronic communications networks) to give you direct access to other currency market participants. ECN brokers match trades between buyers and sellers and do not trade against their clients, instead passing orders to liquidity providers. ECN brokers provide the tightest spreads and only charge a fixed commission per forex trade. Tight spreads are particularly relevant if you are adopting a scalping strategy.

Your chosen broker should use Metatrader

Chose an online broker that uses the MetaTrader 4 forex trading platform (MT4). MT4 licenses to forex brokerages who then provide the software to their retail traders. It is a flexible platform built on the MQL coding language employed by most forex trading software that you may choose to use as part of your more overall trading strategy. It may include enhanced technical analysis tools or an Expert Advisor as part of an automated or semi-automated trading setup.

Only use a regulated broker

Not only are tight spreads, fair commissions, excellent customer service, and MT4 capability important when choosing a broker, it is also very important to ensure the broker is fully regulated.

If you are a U.S. based forex trader, you are required to use a broker that holds full registration with the CFTC (Commodities and Futures Trading Commission). This highly respected regulatory framework safeguards investors’ interests by ensuring a broker maintains complete records, reports, and disclosure. To become CFTC registered, a broker needs to keep a substantial holding deposit with the regulator, meaning not all brokers can offer their services to U.S. currency traders. Investopedia has an excellent resource for comparing forex brokers including those considered the best for US Traders.

Finally, a good demo account is also desirable, as that is an integral part of becoming a proficient forex trader, and we cover this next.

4. Start Using A Demo Account to Dial In Your Strategy

As a novice trader, the first thing you should do is trade forex using a demo account provided by your online forex broker.

A demo account works in the same way as trading real money on your brokerage capital account. It will allow you to trade a theoretical amount in a live environment without putting your capital at risk.

Most online brokers do offer a degree of training on their platforms, including charting tools for technical analysis which is well worth going through as it will give you an idea of what you should be looking for on charts to complement your system for trading in forex.

Demo accounts additionally serve to familiarise yourself with a broker’s electronic trading platform. When you trade with real money, you must be proficient with the order entry system, so you do not incorrectly enter a forex trade and lose money.

5. Integrate Forex Trading Software to Complete Your Trading Style

Once you are operating with a demo account, it will be essential to have at the very least a charting package. Some of the more basic charting software tools are free, and there is an annual subscription for others. It is best, to begin with, the platform’s free version provided to get a feel for how they work. You can then choose more advanced charting software packages such as TradingView, or Esignal offered on a subscription basis.

Automated software can also be a great option as part of a broader trading system. Using automated trading takes the emotion out of trading. You can use a pre-programmed Expert Advisor (EA) to identify forex trends by following a set of rules and which then recommends trades based on any signal identified.

Some EAs, also known as forex robots, will also place any identified trade directly onto the currency market without the need for human intervention. Automated software allows you to place trades automatically, meaning you do not have to be at your desk for long hours. The robot does the heavy lifting. Many professional forex traders do, however, prefer to maintain an element of control by only using EAs to identify trades and then choosing whether to act upon them or not.

Read more about forex robots in our detailed guide on how to find a profitable forex robot to accompany your trading strategy.

Go Live

Now you are ready to go live and start trading with real money. At this stage start with small trades and adhere to two principles:

Risk management

Make sure your money management system is strict, and do not trade with more than 1% of your capital. Combine this and always use a stop loss to avoid any significant losses.

Statistical Expectancy

Think about your overall trading strategy and statistical expectancy and not about individual trades. The aim over the long term is to trade using probability, and if you know your trades have a good chance of making a profit over the long run, individual trades are irrelevant.

We have two further written resources that provide more related reading to this article:

How to navigate to the journey to an expert trader

10 useful tips on how to trade forex profitably.

Written by Chris Gillie

Do Forex Robots Improve Your Winning Odds?

If you trade forex, you will know that timing is critical. A forex robot can take the guesswork out of flaws in human timing, including emotion, by not only identifying trades but if you choose to do so the robot also automatically enters and exits trades with no manual intervention.

Trading forex can be very exciting and profitable, but remember, it is a zero-sum game. For every FX winner, there is a loser on the other side of the trade. To be a winner, you only need to be right a little more than half the time.

As part of your broader trading system, can you expect to be a winner more than half the time with a forex robot?

To help answer this question, it is crucial to undertake rigorous research before adding a forex robot, also known as an Expert Advisor (EA) to be part of your trading system.

Once you have identified an EA to match your strategy, it is then vital to both backtest and undertake at least 50 trades with it by forward testing in a demo environment before progressing the robot to real account trading.

Research is Key

As part of your forex robot research, it is essential to consider the following points when considering adding a robot to your existing trading strategy.

Compatibility

Does the Expert Advisor’s underlying trading strategy align with your trading strategy?

For example:

Does it trade the currency pair or pairs that you already trade?
Are you a day trader using a scalping strategy? If so, a scalper robot like Forex Megadroid is probably the most relevant robot to your trading system.
Do you trade a particular session? If so, does a robot also generate trade signals during that session?

The Key Metrics for Evaluating Robots

To verify robot performance as part of your research, the robot developer must have verified performance data on a real trading account for you to analyze. Two essential resources provide this data, MyFXbook and FX Blue. Consider the following statistics as part of your research:

Profit factor

The profit factor can reveal whether a robot makes money, and so is a crucial metric. The profit factor or PF displays the relationship between profit and risk, calculated by dividing gross profit by the gross loss on all trades. An EA with a PF of less than 1.0 should not be considered for selection as it will lose you money.

Risk-reward ratio

The risk-reward ratio is an indication of a robot’s level of risk. A high risk-reward ratio indicates that a robot has a riskier strategy coded into its algorithm and should be openly questioned.

The golden risk-reward level of 3:1 is considered the benchmark to apply to a trading system where every $1 risked expects to see $3. It means that you could trade profitably with a robot that is only correct 50% of the time. Consider the below table that illustrates this point where if you only had winning trades 50% of the time you would still make an overall profit over 5 trades of $20,000 using a 3:1 risk-reward ratio.

Trade	Loss	Win
1	$2,000	$6,000
2	$2,000	$6,000
3	$2,000	$6,000
4	$2,000	$6,000
5	$2,000	$6,000
Total	$10,000	$30,000

Drawdown

Drawdown is an essential metric and represents the maximum loss percentage since the last high point on your capital trading account. It can be analyzed by studying an equity curve chart. If a chart has large peaks and troughs, it is an indication of volatility. A robot with a high drawdown is not only volatile but also poses a higher risk. Consider robots with a low drawdown like Forex Flex EA represented by a steadily rising chart.

a forex robot looking at a currency chart

Maximum drawdown

This metric represents the robot’s maximum loss after the last high point in capital on your trading account. For example, a 60% drawdown indicates that an EA lost 60% of the trading capital value at one point. If it were to occur right after trading started, it would mean an instant fall of 50% in your capital account!

Average drawdown

Average drawdown is the comparison of several different drawdown amounts. If a robot has five drawdowns, adding them up and dividing by five gives the average drawdown. It will offer you an idea of the average loss size during a period of drawdown.

Backtesting is Vital to Verify a Forex Robot’s Results

Some forex robots are programmed to be quite active and will put on trades several times a day. Others will trade less frequently, only when conditions are optimal. Some automated programs, such as Forex Flex EA have a lengthy history of positive reviews and long-term backtesting to confirm their validity. You can also look at the results obtained from recent live trades for confirmation.

Best of all, you can link them to the MetaTrader demo account without risking real money. It should provide the necessary validation. If you are a new or a seasoned trader, a robot can help you become more profitable as part of a robust forex strategy.

Statistical expectancy

It is essential to completely disconnect from whether your next trade placement makes a profit or a loss. If your underlying strategy has an edge, you do not have to be right even half the time to trade profitably. Statistical expectancy allows you to evaluate your trading system’s performance objectively by testing robot performance from fifty trades.

Forex robots allow 24/5 trading

There is a vast choice of automated trading software that allows robots to direct your trading through algorithms. Most are simple to install and get running, linking right into your online broker’s platform.

If your broker uses the MetaTrader platform, then automated software integration should be straightforward as most robot developers use the MQL language code of MetaTrader for scripting forex robots.

Conclusion

Forex trading can be profitable and exciting. By undertaking extensive research and testing to get the right forex robot trading for you, further reinforcing trade signals aligned to your strategy means guesswork is further reduced. The risk of trading outside the confines of your strategy through psychology also reduces.

For every side that there is a winner, there is also a loser. Which side would you prefer to be?

Written by Chris Gillie

The 15 Best Resources to Learn Forex Trading Online

When starting in online forex trading, you must understand the mechanics of the Forex market. If you want to preserve the cash balance on your brokerage account, at the very minimum, you must have some concept of economic fundamentals and technical analysis.

The primary influencer of forex markets is global macro-events and news and the potential to make significant profits in forex requires volatility. If the FOMC cut US interest rates unexpectedly, currencies are likely to move wildly. Inexperienced traders may be unsure how to trade in volatile markets and make irrational trades in panic. Experienced traders with a system trade without emotion and will always benefit when the inexperienced do not.

Without having a robust strategy or trading plan in place, trades are mostly thoughts only, and thoughts are emotions. It is a weak base from which trade. Getting a forex education and developing a trading plan is vital if you want to thrive as a forex trader. How can you do this?

There are different ways to study foreign exchange basics before you dive into the wild world of forex trading and there is no reason that it should cost you any outlay with an extensive number of free forex learning resources available on the internet.

The Best Free Forex Resources Online

Until you understand basics like the forex quote system, trading terms, and market participants, you will not be able to move on and develop a robust strategy for forex trading. Free resources are available online to aid you get the basic forex education necessary to move forward and trade forex. The top forex trading resources for mastering forex basics are:

1. FX Street

The A to Z of everything forex from the basics to advanced strategies, FX Street is an accessible resource in the online trading community.

2. Forex.com

An extensive library of educational content is available at Forex.com. This well-regarded CFTC registered online broker caters for all levels of trader from the newbie to the experienced pro and it is free to open an account to access the full suite of educational trading resources.

3. Investopedia

Interactive learning from basic up to mid-level education, Investopedia is an all encompassing bible of financial information which is easy to navigate with a simple to understand layout.

4. Babypips

Great for beginners to understand the basics of forex by presenting complex information in a simple way. Baby pips also have a busy forum where you can ask any forex related question and expect to receive an answer from a member of this thriving community.

5. Investing.com

A forex trading website that specializes in beginner traders and provides free to use information and resources, including educational material, analysis, and real-time data.

6. Bloomberg TV

Expert panelists and reporters will provide you with copious amounts of forex market information to digest. Immersing yourself in Bloomberg TV every day is a necessity to get an understanding of the FX market.

7. Youtube

Learn from Youtube channels dedicated to forex from researching tools and platforms to videos explaining trading concepts. Here is an example of a high quality beginner forex tutorial made available on Youtube byTrading 212 which has more than 1 million subscribers.

8. DailyFX

A free-to-use site, DailyFX provides real-time news, live market data, and in-depth technical analysis for those looking to build their forex education.

9. Trading View

Excellent for charting, Trading View, through cloud-based software, allows all traders to track and research the forex market with customizable charts

10. Forex Factory

Forex factory has a trades section where beginners can watch live trades placed by a more experienced market participant. An excellent forum section hosts a broad range of active forex related discussions.

The Best Online Forex Tutorials

Online tutorials train you to read charts, understand price dynamics, open and close positions, and see developing patterns, a further move towards developing your trading strategy. We see tutorials as an integral step to learn how to trade forex.

There is a number of online tutorials to choose from. We have selected our best five

11. Learn to Trade

A site which offers free live FX workshops and a lot of other free online resources

12. Trading Academy

A website that provides a free online trading course if you subscribe. Trading Academy also offers free-half day training courses all over the world

13. The Forex Guy

Access to a forex trading course that will teach you how to interpret charts, access to weekly video tutorials and access to a trading community forum

14. 2nd Skies Forex

A highly rated, free beginners course in forex consisting of 12 chapters covering you from the basics to forex trading strategies

15. Winners Edge Trading

Well known within the forex trading community, Winners Edge offers some free tools including forex calculators

Finishing Your Online Forex Education

Once you think you have covered the basics through free online resources and furthered your forex education with online tutorials, it is the time to develop a strategy.

Unless you have done so already, you will need to open an account with an online broker, and the final stage before you start trading with real money will be to hone your strategy on a demo account. A reputable CFTC regulated broker like forex.com will allow you to open an account and practice in their demo environment.

Forex resources, ourselves included, advocate getting hands-on experience by using a demo account. Learning not only to develop or fine-tune a strategy but also to familiarise yourself with your broker’s online platform to avoid making order placement errors when you commence trading live.

We wish you happy trading – From everyone at Axcess FX

Written by Chris Gillie

What is Forex Charting Software?

Forex charting software is a computer program which helps traders compare the price of a currency pair using different trading indicators. The most popular technical indicators includes moving averages, bollinger bands, fibonacci retracement and relative strength index.

The practice of studying charts and patterns is known as technical analysis. It is used by traders to analyze the market and find indications about the future performance of a currency pair.

Identifying trade signals and price patterns may seem confusing at the beginning. There are excellent online courses, tutorials, and books on technical analysis essential for those learning charting as part of their trading education.

Charting software as part of a trading strategy

Charting software helps traders undertake their technical analysis and is a vital tool in implementing a successful forex trading strategy.

Focusing on one specific trading approach using charts and implementing it into a disciplined strategy is recommended.

Simulated paper trading can be employed to help traders understand how technical trading indicators identified as part of their strategy behave in live markets. From charts, beginner traders may choose to paper trade a simple crossover strategy tracking two moving averages on a currency pair.

Should you invest in charting software?

Most online forex brokers offer free charting software to support your trading activities when you open an account on their forex trading platform. The MetaTrader platform, which is popular with online brokers, offers excellent charting software.

Other platforms may not have competitive charting software and many traders prefer to use their own charting software purchased independently. If you are thinking of investing in independent software, it is vital to first read online reviews to get informed independent feedback before committing. We have a detailed guide where you can read further about the benefits of reviews and how it will help you decide on the appropriate charting and technical analysis software.

The following software development companies offer good FX charting software:

NinjaTrader
eSignal
MetaStock
ProfitSource

What constitutes good charting software?

Proper technical analysis focused software should have interactive charting features allowing you to work to implement a charting strategy as part of your broader trading system.

Features must include technical indicators, including moving averages and oscillators and also patterns such as shapes and trendlines. Charts will include bar and candlestick charts and opening and closing prices. Time frames vary from a minute up to multi-year intervals. Traders usually employ candlestick charting as it displays the broadest amount of data.

Takeaway thoughts

Before you consider purchasing charting software, make sure it has useful support features, including advice and support for trading on the Forex market, a possibility to ask questions about using the software’s features, and technical support.

Considerations When Buying Forex Trading Software

Purchasing the right forex trading software at the outset is crucial if trading software is part of a broader FX strategy that you want to pursue. Opting for the wrong software and your forex trading career could go from very good to very poor in a short time.

The concept of using forex software, which provides you with charts and graphs and sends signals, may seem desirable. However, to justify the implementation of software, your sole concern when undertaking research should be functionality alone.

Search online and find out as much as you can. Do your homework and make sure you understand what you need to know. Unless you know how all the features in forex trading software works, you will not be in an excellent position to analyze the software by backtesting and paper trading as part of a broader strategy.

Forums as soundboards

If you feel you may have identified the right forex software package, hold off instead of purchasing it immediately. Authoritative reviews and forum feedback on the software are essential reading. You need to invest in the software only when your exhaustive research has identified that it is the best option for any more comprehensive trading strategy.

We have a detailed guide that covers the merits of thoroughly using online reviews to identify the best software.

The best forums for foreign exchange where you can interact with the Forex Community, including for trading software include but are not limited to the following:

EarnForex

A forum with a large community ensuring quick answers to your questions

MT5 Forum

A valuable forum dedicated to software around the MetaTrader trading platform

Forex Abode Forum

A forum with a large community with a heavy emphasis on the subject of analysis

Babypips Forum

A forum focusing on the needs of beginners which is the overall aim of the Babypips site

What Are Forex Robots & How Do They Work?

Forex Trading Using Automation

There is a myriad of forex trading strategies and styles. Traders of differing levels, from beginners to professionals, will have different ways of working. There is a divide between those who want to trade manually and others who wish to trade using automation.

Traders who go down the path of automation will need to undertake plenty of research to find automated software that matches their trading style and correctly carries out trades according to their strategy.

What is A Forex Robot?

To undertake fully automated trading, a trader will need to purchase or develop an automated forex trading robot. A forex trading bot, also known as an Expert Advisor or Forex EA, is computer software that uses technical signals to establish if a currency pair should be bought or sold at a point in time.

As part of an overall FX strategy, a robot helps take away the emotion out of fx trading. Emotions can sometimes result in currency traders opening trades that are not based on logical decisions or market analysis and out of line with an overall trading system. Psychology can amplify in fast or volatile forex markets or the temptation to trade quickly.

The Mechanics: How Do Forex Robots Work?

Many forex trading robots are built using the Metaquotes, MQL scripting language used exclusively with Metatrader Software. Metatrader is a leading forex trading platform used by many online brokers through which their clients trade. The ability to integrate a robot with MetaTrader allows the automatic generating of trading signals and placing orders according to the trade indicators.

Forex robots are chiefly programmed to scan and interpret charts. Additionally, they can program with specific parameters needed to make a trading decision; using forex trading signals, they decide when it is appropriate to trade or hold back.

Forex robots work best when employed to trade specific currency pairs and use a defined range or time frame as part of an overall strategy. They are typically designed to make a certain number of pips within a trading range. They can identify profitable forex trades even in unstable markets, which has an unclear trading direction for a human. They can also follow a clear trend to maximize profits.

In Practice: Do Forex Robots Work?

Forex trading bots can be a useful tool to accompany your trading strategy, but it is essential to employ an EA correctly for full effectiveness.

Traders using robots should never entirely depend on them to undertake their full range of trading activity. Expert Advisors can carry out sophisticated tasks, but their functionality can be limited to how they were initially programmed. Forex trading still requires extensive human observations and research and digesting current news and economic developments that EAs cannot do.

Are forex robots profitable?

Expert Advisors can generate strong profits by following short term trends within specific ranges and then identify the clearest signals on which to trade. Long term trends that can see forex market conditions with sudden adverse price movements are harder for robots to follow with the same degree of success, although more sophisticated robots with dynamic features are beginning to address this issue.

With how much can I start forex trading by robot?

Forex EAs typically work with brokers that employ the MetaTrader platform. It is the minimum trade size specified by a forex broker that drives the minimum size that can be placed for order execution using a forex trade robot.

For example, Forex.com requires just $100 to open a forex trading account but then has a minimum trade size of just $1.

A Key Consideration Before Buying A Robot for Trading Forex

Ahead of buying a robot for forex trading, perhaps the most crucial consideration is whether the robot forex trader can trade profitably as part of your broader trading strategy. The only way of really knowing is by researching for the right EA and then backtesting specific settings and demo trading before employing it in a real-money environment. Most reputable robot developers will offer a 30 day or 60-day money-back guarantee giving you time to test thoroughly.

An excellent video about automated & manual trading and how you can use a hybrid of both in a trading system

Identifying The Best Robots: Research is Essential

We have undertaken extensive research on the most important considerations to identify solid forex robots. Through our detailed analysis we have created a guide of the best forex robots on the market.

The guide provides full details, but as a concise summary:

First and foremost, you should always look for verified performance through real trading accounts. A reputable forex robot developer will make this available on either Myfxbook or FX Blue.

It is essential when researching EA software to look for authoritative online testimonials and user reviews. Online trader reviews are also essential to determine the general sentiment for a particular robot and if the forex robot trades profitably to improve winning odds. Dedicated review sites include Forex Peace Army (FPA).

Forex trading forums can also be a good source of feedback. MT5 Forum has a high degree of relevance for automated forex software. MT5 is the Metatrader platform forum, and as the majority of Expert Advisors develop using the MQL coding language, you will find many references to robots.

Not only does extensive research need to be undertaken before deciding which automated software to use as part of your trading style or strategy. Once purchased, testing the software is vital to establishing statistical expectancy as part of your overall trading system. Testing can be undertaken both through theoretical trading using a demo account and backtesting.

Backtesting

Although backtests are available from a robot’s developer, there are reasons why you should do your own backtests ahead of any live trading.

Not many developers use modeling with enough accuracy to tell whether an EA will perform well as part of your strategy. If you trade USDJPY and are looking to make a nine pip profit with a six pip stop loss on every trade, if developer backtests do not include individual tick data, real-time spreads, commissions, or slippage, then automated software could actually lose money for you.

Many software developers use the Metatrader Strategy Tester, and as it only uses random bar graph data from the trading day, it is only considered 90% accurate. Developers that provide backtesting with 99.9% accuracy are using historical data with tools like Birt’s Tick Data Suite and offer much more credibility; however, if you are using a robot according to your strategy, you must still backtest according to strict adjustable parameters within the robot algorithms, to align any automated forex to your trading system.

Here is a screenshot of a backtest employing 99.9% modeling accuracy:

What is the Best Forex Trading Robot?

Our detailed research on understanding the role of forex robots values low drawdowns as the most important criteria for choosing a forex EA. A robot algorithm generally employing a lower drawdown has a less volatile strategy and should give more consistant monthly performance.

Forex Diamond is the robot with one of the lowest drawdown that we have researched. We have undertaken a full review of Forex Diamond to complement backtesting and full performance results at the Forex Diamond official site.

The other EA we rate very highly at Axcess FX is GPS Forex Robot 3. It is one of the top 20 robots we have identified according to our ranking criteria. Its drawdown is within the parameters of 20% to 40% that is considered safe for an EA, but it is the sheer length of time of 8 years that it has been trading profitably on a verified real trading account that is so impressive.

Unusually for a Forex EA, it has been used by a Wall Street investment firm to trade profitably, and the results are available to view at the GPS official site. It is unusual because most large investment firms have their in-house quants and programmers and rarely use external auto trading software, preferring to develop in-house. Read our detailed review of GPS Forex Robot 3

Develop Your Own Forex Robot

Technically capable traders may consider building out their own forex robot. The advantage of this is developing an automated system based on their own technical trading rules. Demo accounts that use Metatrader allow experimentation with MQL scripts, and after backtesting, it may be possible to develop a capable robot.

A simple example of a robot could be one designed for GBPUSD, where a trader has a strategy for take-profits and stop-losses following a technical break-out. A robot could be programmed with rules to place trades automatically rather than the trader has to make a manual order placement.

Final Takeaway

It is essential to remember that forex trading robots work at their best identifying a narrow set of parameters to which they program. They are a useful addition to a defined trading strategy but should not be used on their own as a stand-alone trading system.

Forex robots have, at times, received bad publicity due to their association with promises of guaranteed profits that have not materialized when used to trade in live markets. If, however, you do your research and undertake your backtesting, there are enough proficient robots out there to make a difference to your trading.

Written by Chris Gillie

Is It Possible To Make Money Forex Trading?

Statistics place those that make money trading forex at between 10% and 30% of all market participants. Whether trading personally or professionally forex trading is not guaranteed to make you money.

So how do you make money in forex? How can you increase your chances of success in one of the fastest moving financial markets?

Read on, and we will explain how.

How Can you Make Money in Forex Trading?

If you are a retail investor, Bloomberg report that research undertaken by forex broker FXCM of its retail clients highlights that 68% of accounts had a net trading loss.

It indicates that one in three retail forex traders did not have a loss on their account, but it does not give a glowing confirmation that everyone becomes rich from trading in forex.

If you are well researched and disciplined, you can be one of the 32 % of traders who do not lose money trading forex even going on to make a good income from the markets. Financial rewards can be substantial if you can differentiate yourself and become a skilled forex trader.

How Much Can you Make Trading Forex?

A robust forex trading system should win 50% of the time if you have the right trading conditions to undertake a sufficient number of trades. If you are day trading EUR USD, it may prove challenging to find up to 5 suitable transactions a day if the market is trading in a narrow range.

Assume your strategy limits a losing trade to 6 pips and attempts to make nine pips on winning deals, and you have $10,000 capital in your trading account. 10:1 leverage with a maximum risk of $100 per trade (1% of $10,000), your leveraged trading position is $100,000. The maximum risk is $60 per trade (6 pips of $100,000).

Assume you trade EUR USD five times a day on 20 trading days a month which is 100 trades a month

A 9 pip win = $90 per trade x 50 transactions per month = $4500

A 6 pip loss = $60 per trade x 50 transactions per month = $3,000

Your net profit is 1245 US dollars per month

Six Basics To Follow To Make Money From Forex

We have listed the following essential points that you need to adhere to make money when you trade in forex and keep your your capital account stable.

1. Trade forex less to gain more

Try and focus on the trades that will make the most significant gains rather than trading for its own sake. To do this, you must always be informed and alert.

2. Do not diversify

Stick to trading one currency or specific currency pairs and become an expert on it. If you are having success trading GBP/USD why would you start trading EUR/JPY

3. Understand compounding growth

Small gains compounded over time can produce some astonishing results. Consider the following. If you target a 50% annual profit, you can grow a $10,000 account into over $250,000 in under ten years

4. Make your stop loss into a stop profit

Always maintain your stop loss at its original level. Only move it up when the position is well in profit, but don’t trail your stops too close. Give that open position a chance to run.

5. Give your positions breathing space

Trading can be volatile. If you are after a significant gain give your trade breathing space with a stop-loss that takes account any market volatility

6. Limit risks but maximize your chance of success

Many traders lose money not by market direction but through unstable financial markets that take out tight stop losses. Consider buying in or at the money options to avoid getting stopped out rather than trading the underlying spot.

12 Ways to Avoid Losing Money in Forex Trading

It is essential to have a rigorous system in place to minimize losing money. Below we list the most critical areas of consideration to help reduce the risk of losing money.

1. Do your research

Do not dive in and trade if you have no underlying knowledge of the forex markets. Here are the key areas to consider

Understand how foreign exchange works, including quotes and what factors affect it.
Will you use technical analysis or fundamental analysis?
Will you use manual or automated software?
Which domestic and foreign currencies or currency pairs will you trade?
What hours and which session (European, Asian, US) will you operate?

2. Use a reliable broker

Only open an account with a broker that is registered with both the CFTC and the NFA. A central issue here is making sure your deposit and funds in an account will be safe. Interactive Investors, Oanda, TD Ameritrade, IG USA and Forex.com are CFTC and NFA regulated brokers.

3. Make use of a demo account

Good brokers will have a demo account for you to use before going live. Make full use of this to practice getting familiarity with the broker platform, so order errors do not occur when you go live.

4. Begin with small trades and pre-plan

If you have had success with a practice account, it is a great start. When going live, a critical risk is emotion as real money is at stake. Trading in a small size will allow you to practice minimizing emotion, which is an unwanted part of trading. Emotional trading occurs when you do not pre-plan your trades.

5. Protect the downside

Always put a stop loss in place to protect your trading account. Foreign exchange is a fast-moving financial instrument. Unexpected news can move the forex market and if you have a leveraged position without a stop loss, this could wipe out your cash.

6. Exit trades properly

If you are in a winning position, do not come out too early. If you are in a losing position, do not compound the damage. Try and minimize stress and emotion in your decisions.

7. Be aware of leverage

Leverage should be used with care when you are starting in forex. Brokers can offer up to 50 times of leverage. If you have $5,000 in your account, a $250,000 position results from using 50:1 of leverage.

8. Do not trade for the wrong reasons

If a currency pair is not moving, do not enter a trade just because you are bored. Have a trading strategy in place for your trade.

9. Do not give up too easily

Getting trades wrong is normal. Even if you are having a bad trading day, try and keep to your daily trading limits and not quit because you are losing.

10. Maintain accurate account book-keeping

Keep an accurate record of every trade. Having instruments traded, why you entered into a position, and the profit and loss to hand can help you identify mistakes and avoid doing them in the future.

11. The impact of tax

What is the impact of tax on your FX trading? Ensure you do not have any unexpected tax bills to pay from your FX trading. A tax specialist can also advise if your trading can be tax efficient.

12. Trading is a business

You do not become a successful FX trader overnight. Stay organized, set realistic goals, and treat every day as just another day at the office, whether you have winning or losing trades.

Key Takeaway

Can you make money trading forex? The answer is there are no guarantees you will successfully trade Foreign Exchange. However, being organized, disciplined, and having a trading strategy in place will give you the best chance of being one of the 32% of retail traders that do not lose money in the forex market. For further relevant articles we have written further tips on how to trade forex profitably and how to maintain focus when trading.

Written by Chris Gillie

Forex automated trading systems and software explained

No product becomes popular without possessing something attractive and beneficial for the targeted user. The industry of trading has become quite popular and there are number of reasons for this popularity. Some of the benefits include the fact the foreign exchange market is open day and night all over the world and is extremely liquid. Currently, it has been reported that every day 2$ billions changes hands.

Automated trading systems play an important role in this industry. Through the program you can trade currencies online on autopilot, without needing any human supervision. The aim of the program is to maximize your profits to its full potential. It achieves its purpose by identifying and capitalizing on signals when to initial or exit trades as per the parameters initially defined.

They are scripted and encoded in a way that the mathematical algorithms are able to produce money-spinning results. It is worthwhile to mention that functioning of these systems is dependent very much on the extent of how well the system has been executed and programmed.

Although the systems work on autopilot, your trading skill and the experience you have as a trader is also important as it increases your chances of finding and exploiting more trading opportunities. Trading programs can be aiding tools in the process of your earning money, but your trading skills remain your most important assets.

They can only help but not lead the way to success. Also, you have to understand that there are no immediate returns, systems can be beneficial in long term and you must understand how they function.

It is generally claimed that most programs can generate a regular income for $100 or so to say the least. But that is not always true. The back tests that they offer as a proof are not actually a proof. The reason being those tests are conducted in only favorable conditions without projecting the element of unpredictability of the market. Often it is assumed that the simulation profits of the software will actually repeat itself in real life. However, it is not history. Simulation track record never repeats itself.

It is a very difficult choice as in which autopilot system is suitable for you. There are numerous trading systems available. Not all of these trading systems are useful. Some of them are just worthless pieces of software. But is it not like going to the moon and back to find an affordable system which actually performs well. I would suggest that you choose systems, which has good price and all the functions are as per your business needs.

Avoiding Mistakes – Forex Tips for beginners

Depleting your capital account with your online broker is undesirable.

As an inexperienced trader, what are the ways that you can cut out mistakes and limit trading losses?

We highlight what essential controls need to be maintained to at least give yourself a chance to make profits as a forex trader.

Essential controls to avoid trading mistakes

1 Master one strategy at a time

If you are new to forex trading, trying to learn too many strategies could slow up your learning process and cause losses on your trading account.

As you become more experienced, it is reasonable to use different trading strategies, but at the beginning, master one strategy at a time.

2 Simplify your trading

Novice traders tend to overcomplicate trading creating technical indicators and trying different expert advisors. If you use chart software, your chart may obscure by all the technical indicators flashing up on the screen.

It is best to focus on the raw price action that presents itself on every chart. Learn what the price is telling you, and the simplicity of trading will become apparent to you.

3 Avoid trading in different markets

Novice traders tend to trade on multiple markets with little understanding of the market. Known as noise trading, traders enter trades without the proper technical or fundamental research to justify the trade. If you want to trade on different markets, it is essential first to trade them on a demo account.

4 Over leveraging positions

Inexperienced traders are often susceptible to using too much leverage in their trades. Online brokers offer levels of leverage that put the capital account of a new trader at risk. Leverage of more than 100:1 is not uncommon. As the amount of leverage magnifies the profit and loss on a trade, it needs monitoring.

5 Lack of research

Proper research of a currency pair or currency market is essential to trade successfully. In-depth analysis should shed light on entry and exit timings and market trends. There may be slight differences between currency pairs and how they work. Detailed research is essential to put a proper strategy in place.