To make it clear what the article concerns, the automated Forex Trading System executes trading without you following the rules or margins set by you. It is some kind of set of rules which executes the trade with one or more currency pairs. All those can be done manually by traders, sitting at their computers, but some of them prefer the coded and automated trading process to make it without the involvement of emotions, which finally appears to be more profitable. They are so-called robots that can analyze the market 24/7, searching for new opportunities and executing trades accordingly.
There are two ways in which you can become the owner of an Automated Trading System – Creating or Buying it. The creation of your own trading system is possible on the platform that IG offers, such as MetaTrader or ProRealTime. Those two will also help you to an installed system that is created by a third party.
How to build – A Guide
Generally, there are five major steps for those who want to build their own automated forex trading system.
Creating a Trading plan
in order to manage your time more efficiently, it is a good idea to set your own, detailed trading plan – this is a blueprint that helps to define and analyze your aims and the automated system will assist you and help to achieve your goals in this regard. There are some most important key factors to take into account:
- Which market are you starting with, for your system to trade
- When is it convenient for you to operate
- To define the risk-reward ratio
- Define the strategy that will be used by an automated system.
After deciding what you want your system to do for you, the next to define is how it will be achieved. This means that you have to define how you want your system to identify the actual trading opportunities and what should be the next step after finding those opportunities. There can be two options: to trade without your permission or send you the notification in the order for you, to make the decision. In order to identify trends, it is good to start using Forex trading robots for automated trading that will additionally help you to place your trades. This means that the whole process is dependent on the technical analysis and making the system as understandable as it is possible for you, is the key to the successful trading process.
Which risk management tools to use
In risk management tools we mean the stop signal you will be receiving and there are three types and the main goal is to choose the one that will be suitable for your chosen platform.
- Basic stop – to close your process as near to the positioned price level as possible
- Guaranteed stop – it will always close your position at the level you specify.
- Trailing stop – it follows positive price movements to lock in profits.
Building your automated forex trading system
Before this step, you have written everything on paper and the next step is to convert it into code. Coding language is dependent on the platform you use – all of them have different features. It does not necessarily mean that you need to have a thorough knowledge of the coding system. Hiring a developer can do the job for you, which will help to save your time and energy for the trading process itself.
Backtest and refine your automated forex trading system
In order to complete the final stem which is backtesting, the system will use historical data and refine it to achieve desired results. It is a very important step because you are given the opportunity to execute the first trial trading as an example without putting your first-time deposit and actually risking your capital. However, it might have little ups and downs as the live trading situation might have different results because of the instant changes in the financial market.
After going through those steps and completing all of them, the only step left is to put the system in the action. Due to the fact that from now, you will be using an automated trading system, it does not mean that you are able to walk away from your computer for good. Due to the rapid changes in the market, the system might have some flaws that will require your attention and help.
Finally, as we have seen, the process of creating your own automated forex trading system is not as difficult as the name sounds. The main factor in the process is to have the knowledge of the market and its characteristics in order to define your trading strategy and needs. If you are not able to do it on your own, you can always find a developer to help you accomplish your needs.