The Pros and Cons of Using an Automated Trading Platform for FX trading

The Pros and Cons of Using an Automated Trading Platform for FX trading

by David Redmond on 11 Apr, 2012

Thanks to the onset of the World Wide Web, virtually anybody can now trade in the currency markets and as a result, many people are turning to this as a way of making money from the comfort of their own home. Many traders have opted to use the automated trading platforms that some brokers offer, and this makes up for around one quarter of all trades within the Forex marketplace. It is clear that the ‘set it and forget it’ mentality works for some people and the thought of being able to leverage your time can be an extremely attractive proposal to many, but the question is do they really work? Take a look at the pros and cons of using automated systems.

Pros

• Non human emotions-An automated trading robot clearly doesn’t suffer from emotions when trading, and this is one of the biggest issues that trading manually can bring. If you set a plan for the robot then it is going to stick to it no matter what and the emotional issues that can be associated with humans, which can cloud our judgement, are not present.

• Speed-Robots have the ability to make faster calculations than humans and can monitor several currency pairs and indeed markets a lot quicker than any human could. This means that they can take up trading positions that are much faster, and can also react to the market that much quicker.

• Leverage your time-This is one of the major attractions about automated trading and the fact that you don’t have to sit there all day monitoring the trades. Instead, it leaves you free to focus your attention onto other things.

Cons

• Downtime and system crashes-Computers crash or lose internet connection from time to time and that is a fact of life. However, when this happens to an automated Forex trading system it could cost the individual a lot of money, because it might not be able to close out a trade or alternatively may not be able to open up new trades. Some brokers use remote servers to get round this problem, however it isn’t a completely fail safe solution.

It is clear that there is no right or wrong way when it comes to deciding whether to go manual or automated, but instead it is a case of what works for you. Alpari (UK) Ltd is a Forex broker that provides innovative technology, comprehensive market research tools and excellent customer service.

About the Author

David Redmond


David Redmond is a Partner of Don Gilliard Finance Group. He is a fee-only, independent financial advisor and financial planner. For over 15 years, he has been helping individual investors and their families realize their investment goals.