Before we start looking into details of Forex trading like pips, lots, quotes and margins let us look at the big picture and go over the 4 different approaches to Forex trading and see why using automated trading software combines the best characteristics of the other three methods.

Automated Trading Systems (ATS) are a relatively new concept which quickly grows in popularity among retail forex traders. As any other new phenomenon, automated trading has its critics and skeptics. Nevertheless, automated trading is a serious technology.

Why use an ATS?

There are 4 ways you can go about trading in the forex market, and using Automated Trading Software is one of them. The other 3 are: self directed trading ("manual" trading), using alerts (a.k.a. "signals", e.g. Forex Automoney) and opening a managed account. The best thing about automated trading is that it removes the disadvantages and combines the advantages of the other 3 forms of trading.

ATS Versus "Manual" Trading

Most self directed traders are hunted by two major problems: emotions and poor risk management. Emotions are usually the demise for most self directed traders; fear and greed are the two main issues that usually stand in the way of success. Traders often close trades to early because of fear or refuse to terminate a losing position due to greed.

Using an automated system solves the above problems because all trades are executed automatically since the entry and exit points are programmed into the system. Along with the emotional aspect of self directed trading, time management is often another pitfall. Using an automated system can alleviate this problem, for American traders who want to trade the European session that requires being up in the middle of the night. With an automated system operating 24h a day, your trades are executed even while you sleep!

Automated Forex Trading Systems work according to predefined trading instructions. You can learn how to program your own system if you feel like it, or just buy one of the few proven ones available on the market, e.g Forex-Autopilot.

Automated Trading Systems are not just a dumb formula - a number of parameters can be set within your automated trading system. You can define price patterns, market trends (such as fading or counter trends, following trends, or breakout trends), price points, averages, technical indicators, price level proximity and other custom rules for trading. The system will then use the parameters to adjust the algorithm accordingly and it will keep working automatically, round the clock, any time of the day or night!

ATS Versus Siganls and Managed Accounts

Another way to trade is using alerts or managed accounts. These are relatively god approaches if you prefer hands-off trading. The problem with both of these is that trade signals are not always reliable and often require a trader to place trades trusting a signal which may appear be contrary to their own judgment. Managed accounts are another popular form to invest in the forex market, however as many people will attest, managed account providers usually make their compensation through the spread so generally it is not a vested interest of theirs to make a client a return since they are being paid on trade volume.

Conclusion: To Err is Human...

By now, you understand the main advantages of Automated Trading Systems. They manage your currency trading portfolio at ALL TIMES. They can analyze and react to changing market conditions within milliseconds. They follow the provided strategies precisely, as you would if you were able to do nothing else but sit by your computer and watch trades all day (and night!) long. With a good automated Forex system, there is no worry that you will miss an good entry or exit point in the night or while at work; and there are no hounding phone calls at inopportune times from your broker who requires immediate instruction. This is the most crucial advantage of Forex trading with automated Forex trading systems, and the best reason to use one.

Using Automated Forex systems allows you to carefully examine your own trading style ahead of time and choose the system that works best for you. The decisions are made in advance, not under pressure, in the heat of the ever changing market dynamics. You can fine-tune your ATS to your own risk tolerance levels. Automated Forex systems take the stress and emotion out of currency trading decisions. Guesswork and interpretation are eliminated; fear and greed are eliminated; reliable, predictable progress is what remains; in the end, all you see is results.

To sum it up, Automated Forex Trading Systems take the worst elements of the human trader out of the picture, and replace them with reliable, precise and tested trading instructions. In a currency market that is always evolving, the only way to maximize your profits is to let this modern technology work for you.