One of the popular trading methods used by forex traders is the automated trading robot. This is the idea that someone has programmed a series of instructions so that when specific forex indicators are met or matched, a trade in your software platform would be initiated. Then, when specific profit targets are reached, the trade would close or if the trade goes in the wrong direction, there would be a stop-loss that would be triggered.
Some of the indicators used to determine the programming behind the automated robot include the moving averages, Fibonacci sequences, Elliot wave trading, and anything indicating a trend in one direction or another.
The difficult part of using these is finding one that has a proven track record with multiple currencies over multiple time periods. These would be based on sound fundamentals that although they may not produce the results claimed by some of these robots, they would be very likely to produce results in any market and with multiple currency pairs.
You could also use these to hedge one currency against another or multiple currencies at the same time if the method itself is working. In some cases and in some circles, this hedging is also known as forex arbitrage.
Once a robot has been created by using software and programming the signals, ins and outs of the trade, then it can be run on the software platform against historical data or charts covering the past year, 2 years, or even further back.
Some trading robots are designed to work with only one specific currency pair and based on the trend of a currency pair over a given period of time, would be profitable. But if that currency pair trend was changing just now in the opposite direction, it may prove to be a loser instead of a consistent winner.
Those robots that are based on sound principles of trading and are able to generate successful trades on one currency pair, should be able to do this on multiple currency pairs. Testing should also be done on multiple historical periods as well both short term and long term.
Several websites have these types of robots that can be downloaded and reviewed by other traders. One other downside to this is that some traders who have a mindset of scarcity first of all wouldn’t want to share their program and wouldn’t necessarily give it a good review, even if it did produce revenue for them.
This shouldn’t be a worry, however, as the market itself is a multi-trillion dollar market and millions of transactions are occurring on a regular basis. Forex indicators can play a big role in developing these trading robots and if they aren’t at least considered, there is usually no basis for any automation at all.
- Automated Forex Trading – A Modernized Approach (forextradingsystemcentral.com)
- Forex Indicators: What You Need to Know (forextradingsystemcentral.com)
- The Basics Of Forex Investing for Potential Speculators (forextradingsystemcentral.com)
Using Forex Indicators For Technical Analysis by Steve