Automated Forex Trading

DEFINITION of 'Automated Forex Trading'

A method of trading foreign currencies with a computer program that is based on a set of analyses that helps determine whether to buy or sell a currency pair at any one time. Automated forex trading uses a computer program that the trader "teaches" to make decisions based on a set of signals derived from technical analysis charting tools. The signals create a buy or sell decision when they point in the same direction.

BREAKING DOWN 'Automated Forex Trading'

In an automated forex trading system, the trader must teach the software what signals to look for and how to interpret them. It is thought that automated trading takes human psychology out of trading.

Automated day trading systems and signals are available to purchase over the internet. However, it is important to note that there is no such thing as the "holy grail" of trading systems. If the system was a perfect money maker, the seller would not want to share it. This is why big financial firms keep their "black box" trading programs under lock and key.

RELATED TERMS
  1. Forex System Trading

    A method of trading forex that is based on a series of analyses ...
  2. Forex Signal System

    A set of analyses that a forex trader uses to determine whether ...
  3. Forex Analysis

    An examination of the changes in the forex market that are used ...
  4. Forex Scalping

    A trading strategy used by forex traders to buy a currency pair ...
  5. Automatic Execution

    A method of executing trades without inputting them manually. ...
  6. Real Time Forex Trading

    A form of speculation in which a trader bets on the movement ...
Related Articles
  1. Forex Education

    Forex Automation Software For Hands-Free Trading

    Automated forex trading software scans the market for favorable trades based on your input. Find out more about this valuable forex tool.
  2. Trading Systems & Software

    The Pros And Cons Of Automated Trading Systems

    Automated trading systems minimize emotions, allow for faster order entry, lead to greater consistency and resolve pilot-error problems.
  3. Forex Education

    How To Become A Successful Part-Time Forex Trader

    Getting started in this potentially profitable market is easier than you might think.
  4. Forex Traders

    A foreign exchange or Forex trader, also referred to as a retail Forex trader, is a person that seeks to obtain profit through buying and selling various currencies on the foreign exchange market. ...
  5. Forex Strategies

    How to Build A Forex Trading Model

    Forex trading markets work 24/7, providing ample opportunities to make profitable trades. How can you build a profitable forex trading model for yourself?
  6. Active Trading Fundamentals

    The Power Of Program Trades

    Learn how programs make up a significant portion of the volume traded each day.
  7. Forex Education

    Forex Tutorial: Currency Trading Summary

    While this online forex tutorial only represents a fraction of all there is to know about forex trading, we hope that you've gained some insight into this topic. We also encourage those of you ...
  8. Forex Education

    Forex Broker Guide: Introduction

    As of January 2012, foreign exchange market accounts for more than $4 trillion in average traded daily value, making it the largest financial market in the world. No central marketplace exists ...
  9. Forex Education

    Working In Finance: 5 Forex Careers

    The forex markets can be both exciting and lucrative. Find out what jobs exist in this space and how to get them.
  10. Forex Education

    The Pros & Cons Of A Forex Trading Career

    Trading foreign currencies can be lucrative, but there are many risks. Investopedia explores the pros and cons of forex trading as a career choice.
RELATED FAQS
  1. What is the best method of analysis for forex trading?

    Types Of Analysis Used In ForexForex analysis is used by the retail forex day trader to determine whether to buy or sell ... Read Answer >>
  2. Is scalping a viable forex trading strategy?

    Scalping in the forex market involves trading currencies based on a set of real-time analysis. The purpose of scalping is ... Read Answer >>
  3. What is hedging as it relates to forex trading?

    When a currency trader enters into a trade with the intent of protecting an existing or anticipated position from an unwanted ... Read Answer >>
  4. In the forex market, how is the closing price of a currency pair determined?

    The foreign exchange market, or forex, is the market in which the currencies of the world are traded by governments, banks, ... Read Answer >>
  5. How do quant traders build the relative strength index (RSI) into their algorithms?

    Learn how quantitative traders build the relative strength index (RSI) into their algorithms. Explore how automated trading ... Read Answer >>
  6. How does the foreign-exchange market trade 24 hours a day?

    The forex market is the largest financial market in the world, trading around $1.5 trillion each day. Trading in the forex ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center