Automated forex trading is the practice of trading current pairs using advanced currency trading software that do not require any human interference. The practice is getting popular, especially among new traders and part-time traders having not much time for trading. The software scans market charts, price changes, price trends, and news; and check for spread discrepancies, patterns, crossovers, breakthroughs, bottoms, tops and other predefined parameters. If the criteria are met the software broadcasts a trading signal and automatically makes the buy or sell trade.

There are many advantages of automated forex trading software. These include
  • Emotionless trading: As there is no or minimum human influence involved, the trades will be unemotional and consistent.
  • Faster trades: the trades will be made as soon as the used defined criteria are met and as everything predetermined the order will be placed in no time.
  • Good for speculation and arbitrage: speculation and arbitrage involves looking for small price/spread discrepancies, software programs can better identify those and can capitalize on those.
  • Absentee trading and time saving: provided that trader has a perfect trading environment and data flow, the software can make trades round the clock without any human presence.

But there are also some disadvantages of automated forex trading.
  • The trading systems are usually costly. And you also need to invest for creating a good trading infrastructure which includes computer, power and internet access.
  • The rules are user defined; that means the trades are going to be as successful as the trader.
  • Relaxed rules can generate many false/no profit trading signals and tighter rules can generate any signals at all.
  • Not all online forex brokers support fully automated forex trading; also most systems only support trading a handful of major currency pairs.