Auto Forex trading is one where buying and selling orders are placed automatically based on an underlying system or program in the currency market. The purchase or sale orders are sent to be executed in the market when a particular set of criteria is met.
Auto trading systems or programs to make buying and selling signals, are generally used by active traders to get in and out of positions more often than the average investor. The auto trade criteria are very different, however, are mainly based on technical analysis.
Forex Autotrading systems started from the date of the emergence of retail sales online, around 1999, when Internet-based companies created platforms to sell foreign exchange that provide a quick way for people to buy and sell in the spot currency market. However, large retailers could negotiate currency contracts on the Chicago Mercantile Exchange and in the 1970’s.
There are two main types of Forex auto trading :
– Fully automatic operations or robotic operations: This is very similar to the algorithmic trading and black box trading, a computer algorithm deceids on aspects of the order such as date, price or quantity and starts the order automatically. Users can only intervene to adjust the technical parameters of the program; all others signals related to market conditions are delivered through the program.
– Autotrading Forex signals: This mode is based on autotrading executing orders manually generated by a trading system. For example, a typical approach is to use a service where traders from around the world have their strategies available to anyone interested in using the signals. Operators can choose to manually run any of these signals in their own broker accounts.
– An automated trading environment can generate more market operations than a human operator can handle and can replicate their actions in multiple markets and timeframes. An automated system is also not affected by the psychological emotions of the human operators. This is particularly relevant when dealing with a mechanical model, which is usually developed on the assumption that all trade marked entries will actually trade in real time.
– Model-based signal provider to offer merchants the opportunity to follow the signal providers strategies that had worked well in the hope that the advice they offer will remain accurate and lead to future profits. Merchants do not need technical knowledge or the ability to define their own strategies and instead they can choose a system based on its performance up to that date, so Forex trading would be accessible to a large number of people.
– In a decentralized market and relatively unregulated, people can fall prey to a number of forex scams. Forex Autotrading, as it brings foreign exchange transactions of the masses makes people more susceptible to fraud. Organizations like the National Futures Association and the Securities and Exchange Commission U.S. have issued warnings and rules to prevent fraudulent conduct of foreign exchange transactions.