A Look at Forex Auto Trading System

What is Auto Trading? 
Auto trading is a strategy used by forex traders in which software algorithms are used to make trades automatically on their behalf, according to predetermined rules. These rules dictate the criteria that have to be met in order to trigger a buy or sell trade. Auto trading systems are commonly used by active day traders, who trade much more frequently than the majority of private investors. There are lots of different types of trading algorithm, but most of them are based on technical analysis.
History of Auto Trading .
Auto Trading Systems have been around since the dawn of the modern Forex market in the 1970s. While the algorithms involved are often complex from a mathematical point of view, they do not require a vast amount of computer power, and were well within the capabilities of early mainframe computers. As computers have become more powerful, the time it takes for an auto trading system to act upon information has become shorter and shorter. These days, most home computers are able to perform these calculations almost instantaneously, with the bandwidth of the data connection being the main factor in the reaction speed of the system. In the late 1990s, the rapid growth of mass internet communication meant that you no longer had to be working for a large investment bank in order to trade on the Forex market. The emergence of web-based retail FX brokers gave private investors the opportunity to trade on the Forex market for the first time, and it wasn’t too long before retail FX traders started to use auto trading systems to make trades on their behalf. Robotic Auto Trading and Signal-Based Auto Trading There are essentially two types of Forex auto trading – robotic (fully automated) trading, and signal-based auto trading. Fully automated trading is quite similar to algorithmic trading, in that a computer algorithm will make trades automatically, with the timing, quantity, and price being decided on by the program according to pre-set parameters. The trader can tweak these parameters, or switch off the program entirely, but apart from this all the control is given over to the program. Signal-based autotrading is a system in which a computer program will be set up to give the user buy or sell signals when certain criteria are met. With this system, the trades are not automatically made, and the user can choose to ignore any or all of the signals given out by the software. This gives the trader greater discretionary powers, and for this reason it is a bit safer than leaving it all up to a computer. On the other hand, it is likely that the user will miss out on a fair proportion of the opportunities presented to them because of the slowness of their reaction time. One of the main benefits of trading algorithms is that they can react much quicker than humans, and can therefore capitalise on opportunities that would be missed by a
manual trader.