How Traders Can Utilize Automated Forex Trading Software?

04 October 2023

The automated Forex trading software lets traders design a set of entry, exit, as well as money management rules for their computers. Consequently, artificial intelligence will execute trades, based on those sets of rules.

Here it is worth mentioning that the indicators upon which the artificial intelligence will rely for trading can be as simple as 20-day simple moving average (SMA) trends, or SMA crossovers. Alternatively, this algorithm can be based on more complicated measures such as Bollinger bands or OSMA indicators.

When it comes to the MetaTrader 4 platform, automated trading is one using the so-called ‘expert advisors’, also known as EA’s. Those are typically created by those highly skilled professional traders who are skilled at writing algorithms, used in trading.
Once traders activate the automated trading on the platform, the selected expert advisor will give them alerts on the latest signals and also can execute trades automatically.

The use of automated trading can have certain benefits for traders. It does promote a disciplined and consistent approach to trading. In addition to that, those trades are not based on trader’s emotion, but on predetermined rules, compelled by the professional Forex traders. However, it is still worth noting that despite all of its advantages, automated trading can not guarantee a 100% success rate.

Basics of Free Forex Trading Software

At this point, some people might wonder why any trader would be willing to give up his or her decision-making power and defer it to artificial intelligence. Well, this can have a number of advantages, such as:

Automated trading can significantly reduce the level of stress during trading for some traders
There are some paid options, but traders can make use of automated trading for free as well
This promotes the disciplined style of trading since the computer will only operate on specific rules
This tool allows traders to trade consistently with the same strategies
Traders can choose from dozens of different experts advisors, each using different methodology and indicators
Forex traders can backtest the performance of any expert advisor, with dozens of currency pairs and different timeframes
Forex automated trading software can give traders more free time to devote to other important activities in their lives
The market participants can switch off an automated trading tool any time and step in to make decisions themselves

So as we can see here, many traders might consider utilizing the auto trade Forex software, because of its number of advantages. Now let us go through each of those benefits in more detail.

Advantages of Using Fully Automated Forex Trading Software

Actually, the first possible benefit of utilizing this tool is psychological rather than financial. Here it is worth noting that there are many people who have a desire to earn some income from Forex trading, but the anxiety about the possible losses pushes them away from taking the ultimate step and opening the trading account. There are also traders, who only stick to demo accounts or only invest very small amounts of money due to the same reason.

However, automated trading software can remove some of this anxiety for many individuals. After all, when traders know that their trading performance depends not only on their skills but also on one of the best free automated Forex trading software, it can be very reassuring. Consequently, the use of such tools can make Forex trading a much less stressful and more enjoyable experience for some people. Therefore, this can help them to maintain their motivation for an extended period of time.

Another major benefit of utilizing Forex automated trading programs is that it can help traders who struggle with maintaining discipline. The fact of the matter is that some market participants do begin their trading day with sound money management rules, but after executing a number of trades, they might become emotional and frequently violate those principles.

Consequently, automated trading software allows the market participants to maintain a disciplined and consistent approach to Forex trading. By avoiding making decisions based on emotions, traders can certainly improve their long term performance and potentially even earn higher payouts in the process.

Here it is worth noting that there is a great variety of choice when it comes to expert advisors. There are dozens of options available, with each based on different market indicators. Consequently, traders can search through those lists and choose that expert advisor, with whom they feel most comfortable. In fact, they can backtest each of those EAs, in order to measure their performance.

In fact, traders do not have to pay any money for this, automated forex trading software free download is available on the websites of several brokerage companies.

Another important advantage of using the automated trading program is that it can certainly free up more time for traders. Many market participants do have other full-time jobs outside trading, consequently, for them using such tools can be very helpful.

Finally, the use of automated trading software does not take away the trader’s ability to step in from time to time and make his or her own decisions. If at some point the market participant feels that something is wrong, or disagrees with EA, a trader can switch off automated trading and take full control over the trading activities.

How Traders Can Activate Automated Trading on MetaTrader 4?

At this point, many traders might wonder how one can activate automated trading on trading platforms. Well, let us take the case of MetaTrader 4. Some experienced traders believe that it is one of the best automated Forex trading software for beginners.

This might sound rather a complicated task, however, it essentially involves just several simple steps. After opening their MT4 platforms, traders need to go to the ‘navigator’ section. It is typically displayed on the left side of the screen. However, if it is not activated, traders can activate it by going to the ‘view’ and then clicking on ‘navigator’. Essentially, the navigator should look like this:

As we can see from the above image, this includes several items. Firstly, traders can choose between different accounts. For example, here traders can switch from demo account to real trading account.

The second item on the list is called ‘indicators’, this includes dozens of different technical indicators for the currency pairs. Traders can activate those by clicking on them, after which it will be displayed on the chart.

The third item is called ‘expert advisors’. As we can see here it is further split into several sections. Firstly it includes those EAs, which were already provided by the platform, without any installation by the trader. In this case, we have 2 expert advisors: MACD sample and Moving Average.

Now in addition to that, there is the ‘downloads’ section, this includes those expert advisors, which the trader has downloaded from the list of EA’s. In this case, the market participant has downloaded only one expert advisor, called ‘Currency Strength’.

Finally, there is a ‘scripts’ section below. This allows market participants to edit the scripts for each EA or write an entirely new one for the expert advisor.

So in order to activate the automated trading, the trader should click on one of those expert advisors and drag it on that currency pair chart, where they want to make trades. Once the traders do this, the following menu will appear:

As we can see here, traders can choose between only allowing for opening short, long, or both of those positions to the expert advisor. They can also enable alerts so that the market participant will receive an alert when the computer detects a trading signal.

In order to activate the automated trading, traders should check the ‘Allow live trading’ box, as well as the 3 boxes on the right side of the image, under the ‘safety’ section. To complete the process, the trader should click ‘tools’ and then choose ‘options’. As a result, the following menu will appear:

So here traders need to check the box ‘allow automated trading’ and then uncheck the following 3 ‘disable automated trading’ boxes. After clicking ‘OK’ and closing this menu, the last step is to click the AutoTrading bottom on the top of the platform, as shown in the above image.

Once the trader completes all those steps, the small smiling face will appear on the top right side corner of the currency pair chart. This signifies that automated trading is already activated. This means that once the expert advisor detects potential trading signals and entry points, it will start opening and closing positions.
One thing to keep in mind here is that it is the trader who chooses the timeframe of the chart, the expert advisor will work with. So for example, if the market participant opens a 15-minute chart, then the EA will base its analysis on that, instead of 1-hour or daily charts.

Also, it is worth noting that the expert advisor will only execute trades with the particular currency pair which is displayed at the chart. Consequently, if a market participant wants the EA to trade other pairs, then he or she has to activate the automated trading for those charts as well.

If at any stage, the trader is unhappy with the results or wants to take full control over those activities, all one has to do is click once more on ‘AutoTrading’ bottom and the expert advisor will immediately stop executing any trades.

Disadvantages of Forex Trade Automation

Now despite the clear advantages, this tool has for traders, it is worth noting that there are some imperfections that affect even the best automated Forex trading software 2020 traders can use.

The first potential problem with completely relying on automated trading is the fact that each of those expert advisors is based on one or just several technical indicators. Consequently, they simply can not take all variables which affect markets into the account.

For example, the expert advisor, based on moving average crossovers and trends, might work well for some time, but it does not take into account such factors as the latest central bank interest rate decisions, GDP growth rate, or CPI announcements. So consequently, sometimes the automated trading is vulnerable to the volatile reaction of the market to the latest economic publications.

It is also well known that even the best automated trading software 2020 traders can use simply can not deliver a 100% accuracy rate. Sometimes the computers do enter into losing traders and are forced to close their positions at a loss.

Obviously, some expert advisors are more accurate than others. However, always expecting winning trades from them is very unrealistic and can lead to disappointment. However, traders can still earn some decent payouts with automated trading, depending on the quality of the expert advisor as well as the market circumstances.

Automated Forex Trading Software for Beginners - Key Takeaways

In the case of Automated trading, the computer opens and closes trading positions, in accordance with specified entry, exit, and money management rules, chosen by the trader.
Using automated trading software can be beneficial for traders in several ways. It allows them to maintain a disciplined and consistent approach to trading, by avoiding making decisions based on emotions. This tool can also make trading less stressful for some traders.
Despite all of its advantages, no Forex automated trading software can guarantee a 100% rate. The fact of the matter is that each expert advisor is based on one or several indicators, but they can not take all of the technical and fundamental variables into the account.

FAQ: Using Automated Forex Trading Software Free of Charge

What are the most common mistakes traders make when using automated Forex trading software?

One of the most common mistakes traders make with using automated trading is not checking the automated Forex trading software reviews and not backtesting them before its use.

As mentioned before, there are dozens of different expert advisors, relying on different indicators. It goes without saying that the degree of effectiveness for each of those is simply not identical. Consequently, just picking one of those, without any due diligence can be a very risky strategy and can lead to potential losses.

Another major mistake some market participants make with those programs is closing trades prematurely after the computer opens positions. The fact of the matter is that some traders get emotional when they allow computers to trade and might decide to lock in gains or limit losses as soon as the market makes any notable moves.

However, if a trader deals with the program with some of the best automated Forex trading software reviews, it is important to trust the expert advisor to deliver results. Frequent unnecessary interventions can significantly alter the outcome of those trades and in this case, traders can easily return to emotional trading.

How does the paid automated trading software differ from free ones?

Obviously, the exact features of each paid automated trading system are different with each software. However, in general, they tend to incorporate many trading indicators, instead of relying on one or two measures. Consequently, in some cases, they might be more accurate than some free automated trading programs.

Another difference here is that the paid automated trading systems are already backtested with dozens of different currency pairs and with a number of timeframes. Therefore, some traders might perceive them as more reliable.

Finally, some of those paid programs allow traders to create their own expert advisors and trading robots much faster and easier than with free software. This can be handy for those traders who like to experiment with different trading strategies and wish to create EA or robots, which would use those methods on a consistent basis.

Is the use of automated trading software compatible with long term trading style?

In general, many traders believe that automated trading software is mostly designed for the short term trades. However, traders using those programs can also utilize them for long term trading as well.

In order to do this, traders can open daily or weekly charts in the MetaTrader 4 platform and activate the automatic trading, by following the steps as described above. Consequently, the expert advisor will execute trades based on those long term charts.

Furthermore, traders can modify the entry, exit and money management rules of the EA, in a way that artificial intelligence might execute relatively less number of traders, but at the same time aim at earning higher payouts for each trade.

Finally, traders can also keep an eye on those latest economic developments and indicators which might have a significant impact on the exchange rate of the relevant currency pair. This can include such variables as the relative nominal and real interest rates, the purchasing power parity (PPP) measure, the relative GDP and inflation rates, and other important indicators.

This essentially means that if at some point a trader feels that the expert advisor is making a mistake and ignoring an important fundamental indicator, then one can simply step in and make the decisions accordingly. Alternatively, as we have seen above, traders can modify the options and instruct the EA to only open long or short positions, depending on the circumstances.

Are there any automated trading options for stock market traders?

Just like with Forex trading, there are several automated trading programs for stock market trading. Yet, there are certain differences between those two types of software.

For example, when it comes to stock trading, the algorithm of the automated trading program can also include such measures as the price to earnings (P/E) ratios, beta indicators, payout ratios, and other items.

Some advanced automated stock trading programs also allow traders and investors to choose the overall goal of one’s portfolio management. For example, the market participants can instruct artificial intelligence to focus on maximizing short term trading gains, long term growth, or put emphasis on increasing the dividend income.

Does the creation of one’s own expert advisor or trading robot require advanced IT knowledge?

In general, the MetaTrader 4 platform, as well as some other programs which offer the opportunity for automated trading, try to simplify the entire process of editing or creating a new expert advisor.

Consequently, traders with at least some basic knowledge of IT can create some simple algorithms for EAs, such as simple moving average (SMA) or exponential moving average (EMA) crossovers.

However, if it comes to integrating a large number of complex variables into the expert advisor, for many market participants it can be a difficult task. Therefore, the editing and creation of more complex algorithms might be more suited for the individual who is very skilled at computer’s programming language. So essentially, it comes down to the degree of the difficulty of creating an individual expert advisor.