- Automation can save time
- Automation can find more trading opportunities
- Automation can reduce trade errors
As discussed in a previous article titled "3 Things I Wish I knew When I Started Trading Forex," I explained how my start in trading Forex was a rocky one. I burned through 20% of my account in 3 weeks and was fortunate enough to stop trading until I had a better education.
Working for FXCM for a few years and then later at DailyFX.com, I was able to refine my trading technique and also begin to incorporate trading automation into for Forex account. Since making these changes, I've completely turned my trading around, and today I would like to share some of the benefits I have experienced when it comes to automation.
Automated Trading Can Save Time
The greatest benefit of all, is the time saved when running automated strategies. Being free from sitting behind a computer screen all day looking at charts allowed me to live a more balanced life. I was no longer required to watch the market during key news events or during specified periods of time each day.
It's nice to not have to stress about looking for trade signals and double checking my analysis to make sure a setup was valid. Instead I could focus my time on more important things, like making sure my actual strategy was effective and looking for ways to improve it. Having the extra time allows the ability to do this, which I think makes a big difference.
Automation Can Generate More Trading Opportunities
Following the same line as the benefits explained above, automated strategies run 24 hours a day, 5 days a week. This insures that every opportunity out there is being capitalized on.
Without automation, we are bound by how much available time we have to commit to look for trades. Many have full-time or part time jobs, and all of us must sleep. So there will most assuredly be times where we miss trade setups. But when we have a program constantly scanning the market based on our set of rules, we know that each trade that could possibly be placed, will be placed. And we know the trade will be managed properly based on our preset rules. We are maximizing our strategies' potential, which should increase profits (if we are trading with an edge).
Automation Can Reduce Trade Errors
We might think that we are disciplined and are careful each time we place a trade, but we are all humans and we will make mistakes from time to time... whether they are intentional or not. True accidents come in a variety of forms, including: placing an incorrect trade size, setting a stop/limit at the wrong level, closing out the wrong trade, or (in my opinion, the worst mistake of all) placing a trade in the opposite direction of what we actually wanted.
Some of you might be laughing at the thought of placing a trade in the wrong direction, but I know there are many of you reading this that immediately thought back to a time when you thought you had placed a winning trade, only to find out that you had a losing trade that was placed in the opposite direction. It happens.
But even beyond those type of trade errors, almost all traders fall victim to their emotions which can cause us to deviate from our strategy. All our work to create a winning strategy means nothing if we don't follow it, so emotions can really hinder performance. When we automate our strategy it takes emotions completely out of the equation. Computers will do exactly what we tell them to do, so we know our strategy will be executed exactly like we engineered it to.
How Can We Begin Using Automation?
There are a couple different ways we can get into trading automation depending on where we are at in our Forex journey.
If we have our own trading strategy that we would like to have automated, FXCM has an excellent programming service department that can assist you with that. They often offer discounts to FXCM traders depending on trading volume and account size.
If we do not have our own strategy, we could then look towards a platform that has pre-built strategies included with it. Mirror Trader would be a good option for this. There are many strategies to choose from with historical data on performance for each one.
Please email any questions that you have to firstname.lastname@example.org and also sign up for my email list to be notified of new articles and videos that I publish.
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