How sensible is it to trade forex automatically?


The world of online retail forex trading has been recently “plagued” by an abundance of added features promoted by brokers and platform providers which claim to be taking away all the hassle off the shoulders of traders and offering them the chance of investing via automated trading based on the signals generated by sophisticated software programmes. If one is then called to answer the dilemma of whether to choose autotrading or stick to the traditional manual trading, the answer cannot be simple and straightforward.  Valid arguments exist on both sides of the debate with manual and auto – trading each coming with its own set of prons and cons. What is of paramount importance is that each existing or aspiring forex trader makes the decision about how to trade having full knowledge of the different parameters and the associated risks and loopholes. To assist our readers make a wise choice, here’s some thoughts we believe should be taken into consideration.

It is true that automatic signals and automated trading are gaining popularity so they can’t be all useless or all wrong. Having said that, if those who provide us with such solutions had indeed discovered the sure, safe, bullet proof way of making all trades profitable then they would surely not have been willing to share their secret with us for free or for the relatively small fee that such online services usually charge their users. Thus, traders should always bear in mind that forex trading is risky business and it might go horribly wrong no matter whether the trading is done manually or automatically.

So, who should we trust more; the human or the robot? Well, the automation that comes through robots could mean that all trading transactions are carried out in a manner that is impeccable, accurate and error-free. However, this can only be true provided that the person behind the software has programmed it properly and correctly, since the robots are only as smart as their creators. Essentially being automated systems that enter trade orders in the place of a human trader, forex robots are programmed to generate returns by the application of mathematical rules which are pre-decided by their creators.

If this basic precondition is met, then using automated trading immediately renders one more capable of trading several currency pairs simultaneously something that would have been very difficult if not impossible when done manually. Another advantage of forex robots is that they don’t get tired like a human trader would be and thus they could be expected to be able to place trades and potentially generate profits on a 24/7 basis.

Many would argue that another pro of automated trading is that it guarantees the totally disciplined execution of the trading strategy that is devoid of any human emotion that could lead to judgment errors and the wrong investing decisions being taken under pressure and stress. Robots are not affected by such factors, on the contrary they follow the set-up no matter what. However, this can easily be turned into a disadvantage. If we accept that forex robots run the pre-programmed routine under all circumstances, then we also have to accept that they don’t change, revise, or adapt it to changing conditions in the market, but will attempt to cut losses based on the instructions provided to by the programmer, and in an environment as rapidly changing and volatile as the forex market, this is clearly problematic.

Because robots, unlike humans, lack the capacity and ability to think they cannot react to changing conditions and adjust their patterns, but will instead reiterated what they have been originally programmed to do. A human on the other hand, will be able to draw on his previous experience and earned skills and be able to change course if this required by the changing market circumstances.

As a conclusion we could argue that it is perhaps not wise to hand over the control of your forex investment decisions to a brainless machine. However, there are distinct advantages to be had when one can employ and analyze all the vast array of available information keeping track of and processing all the opportunities that might arise and also when emotions are subtracted from the investing decision making process.

Perhaps the wisest decision then is the ability to combine the best of both worlds, because when a situation calls for using judgment, rational instead of mechanical thinking and emotions, then an automated trading system could never replace a human trader.