What are Automated Trading Systems?

von Avramis Despotis     Sept. 18, 2019

5 mins read

If you’re just getting started in Forex trading, an automated trading system can be your saving grace...or at least save you from losing all of your hard earned money on bad and risky transactions. It is one of the upgrades that has rocked Forex trading as it allows the user to execute their trades any time of the day or night based on predetermined trading indicators.

An automated trading system, sometimes referred to as a mechanical trading system, follows a set of predetermined rules that allows your system to handle all the dirty work of trading when the conditions of your automated trading profile have been met. The basis for entry and exit can be predetermined, and can generally be based upon moving averages, daily oscillations, and technical indicators that more experienced traders or coders can inform you of before you make your first trade. It's best to use a combination of these factors when setting your entry and exit conditions. Using an automated Forex trading system is the key to earning more money, making trades easier, and seeing a bigger and more reliable profit margin – and here are three of the reasons why.

Automated systems allow you to trade at any time.

No matter how devoted you are to growing your trading profile, no one can be monitoring every currency at every time of day. When you work through an automated Forex trading system, you can set specific indicators that will allow the system managing your portfolio to automatically buy or sell a designated currency when certain conditions are met.

For example, you can set your automated system to buy a certain currency if the 20 period moving average crosses over a 50 period moving average and the technical indicator is lower than 20. Once you have coded your specifications into your system, it will become fully automated; this means that you won't have to go through the process of monitoring market movements or making trades, as the Forex trading mechanical trading system will handle it for you.

Automated systems allow you to perform more trades in a single day.

Back in the day when manual systems were the only means to trade, traders had no choice but to wait several hours for their trades to be completed. However, now that automated Forex trading systems have entered the market, trades can be completed within a few milliseconds. This can make a massive difference in a trader's earning potential for two reasons. First, he or she can perform more trades in a day; naturally, this means more money can be exchanged and more profit can be earned. Second, the speed of an automated system allows the users to trade in real time, taking advantage of buy and ask spreads at a moment's notice. This can be an important factor when you consider the value of a given currency can change with no warning at all.

Automated trading allows you to remove your emotions from your trading strategy.

Ask any veteran trader and he or she will tell you that the best and quickest way to lose money trading Forex is to abandon your trading strategy and trade based on your emotions. The ability to remove human emotion from the Forex trading equation is really one of the biggest benefits of automated trading systems.

Many Forex trading novices believe they can overcome their emotions and trade manually...only to find themselves losing money down the road. Automated trading systems allow traders the ability to let go and let the machine follow predetermined rules. This allows logic to rule and give traders the chance to test out their strategies without the intervention of human emotion.


Forex trading using an automated system can be great for those who are: (1) still working out their place in the market, (2) who are looking to test a few strategies, and (3) those who often times find themselves overwhelmed with emotion during their trading ventures.

If you're looking to get your hands on your own customizable automated trading system, there are a few ways that you can go about doing so. If you have experience or background in computer programming, you can probably create one yourself using online tutorials available on YouTube or Vimeo. You can hire a professional programmer to create a system for you, or you can purchase a pre-made trading system. However, both of the latter options come along with their own set of challenges. How do you find a programmer who is reliable, or a trading system that can live up to the claims it makes? They key is doing your research. Asking for referrals from your trusted partners, reading reviews, and even better, getting the Forex trading education that you need to be able to distinguish the best trading patterns, can get you started on the road to finding the most effective automated trading system for your needs.

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