Using automated forex trading strategies takes away the emotions that come with manual trading for effective results. Automation uses dedicated programs that trade on behalf of humans with faster speeds around the clock.
Choosing the best auto trader guide strategies is not an easy feat. Traders have to try out different available systems to find the ones that work best for them.
While many of the forex trading strategies are available from third-party forex suppliers and brokers are tried and tested, some traders prefer to implement their own strategies.
Creating individual automated systems requires coding proficiency that only specific programs third-party suppliers can offer. However, following the right auto trader guide can make coding the strategies easier to code and implement.
How to Choose an Automated Trading Strategy
If you are new to automated trading, it is hard to choose the best algorithm to use as your trading strategy. The choices range from tried and tested algorithms that you can get off the shelf easily or bespoke algorithms that compliment your past trading habits.
How do you know which one to go with? The following tips will answer the question.
路 Understand the description of the strategy
If you come across a new strategy, you should first understand its description or key logic: the key words to pay attention to include profit target, momentum, and stop-loss order. You should also pay attention to the trend, breakout, range details, and market conditions designed for the strategy. Find an automated strategy that is effective for your target market.
路 Use a demo account
Do not go live with your strategy before backtesting its historical data using a demo account. Backtesting helps to identify the strategy’s profitability and performance before using real capital for trading. Furthermore, it also provides you with other details such as annualized returns, risk-adjusted returns, statistical averages, net profits and losses, market volatility, and others.
路 Use won and lost trades to review the strategy
The automated strategy you choose for your trading will play a major role in carrying out all your trades. Therefore, when evaluating its effectiveness, focus on a larger picture rather than a few details. Start by reviewing the strategy’s last ten performances, which include added pips between currency pairs. If a strategy does not add any pips on an exchange between two currency pairs, you should look at the next one. Do this until you find the one that performs according to your preference.
路 Consider your day-to-day lifestyle
Before choosing an automated strategy that works well for you, you should also consider your lifestyle. Automated systems require some monitoring. If the state of your job requires you to be away the whole day, you may not have time to monitor the algorithmic system. You should therefore choose a system that does not involve hundreds of day trading trades. Instead, choose a strategy with fewer trade frequencies.
路 What is your personality?
If you are one of those people that find it hard to let go, you might rethink the idea of using an automated algorithm as your trading strategy. Too much fiddling with the automation systems may not go down well if you cannot let go. Choose a system that you can trust to work for you in your absence.
路 How is your budget?
Some automated trading systems are free, but others come at varying prices. High-frequency automated strategies build up commissions fast, which means you should have enough trading find capital before you go for any of them.
Wrapping it up
The forex market stays open 24 hours a day. Using automated trading strategies helps forex traders to make use of the 24-hour parameters. Choosing the best-automated trading strategy is not a walk in the park.
However, with all the good auto trader guides available from a third party and forex brokers, as well as those that you can download, you can find an automated strategy that works well for you without you deviating from your other daily activities.
