Whether you are in your early thirties looking to supplement your income or a fresh college graduate who wants to earn money for their world tour, forex trading can be a great way to earn money.
Forex trading has become even more accessible to the general population with the advent of online or automated trading platforms. Not only does online or automated forex trading allows you to sharpen your financial expertise and earn a significant income, but you can also enjoy a greater degree of flexibility over your working hours.
However, automated forex trading platforms aren’t all that rosy and do have a few downsides associated with them. While a forex trading course will help you learn about the pros and cons of automated trading in-depth, this article can give you an introductory overview.
Let’s dive into some of the top advantages and disadvantages of trading through automated forex trading platforms.
What should you mean by an automated trading system?
Also known as mechanical trading systems, these algorithmic platforms allow you to nail down specific criteria for your trade entries and exits. This way, you can automate when and how you trade, freeing up your time to devise efficient forex trading strategies.
What are the advantages associated with these systems?
Here are a few pros associated with automated trading systems.
- You can minimize emotions which allows you to overcome biases and manual errors.
- Automated trading systems eliminate the room for faulty market data interpretation.
- You can preserve your trading discipline even in chaotic times like when markets turn volatile.
- Automated systems improve the speed of your order entries.
- You can easily diversify your trades.
What are the negative aspects of automated trading systems?
You might have to look for the following downsides if you opt for an automated trading system.
- Your trades can get disrupted by mechanical failures or software disruptions within the automated system.
- As much as you want to believe that automated trading systems would take care of everything by themselves, they do need regular monitoring.
- Sometimes, these systems employ so many back-testing techniques, that they result in trades that look good theoretically but perform poorly in real life.
- Many platforms often offer results that are too good to be true and make you fall for a scam.
- Your trades can take longer to materialize and make you money.
Related: Best Forex Signals
How can you pick up the intricacies of trading with automated trading systems?
While automation of your trading can imply your responsibilities as a trader would be simplified, there are several factors that you need to keep in mind. Automated trading systems can be complex for beginners—if you don’t have the necessary experience, you might lose out on profits.
A good trading course can take you through complex aspects of automated trading systems and teach you how to operate them. You can also get ample practice on trading simulators and hone your trading and market expertise.
Start looking out for good trading programmes that can make you an accomplished forex trader!