Why Professional Forex Traders turn to Algorithmic trading?

Forex Trading For Profit

Why Professional Forex Traders turn to Algorithmic trading?

Algorithmic Trading
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Can algorithmic trading be pivotal to your forex success?

Learn how pro traders are using Automated strategies to trade the Forex markets.

Have you ever wondered how professional forex traders are always profitable? Wouldn’t you like to be one of the 5% and finally break away from being a trader that “just prays”… the market goes in your discretion? Unfortunately, only very few retail forex traders know how the pro’s do it. Did you know that by using and incorporating algorithmic trading strategies, it can fill the gap between an amateur and a pro forex trader.

Maybe, you already have a profitable forex trading system but still are unable to be consistent due to lack of screen time or missing trade set ups? With algorithmic trading systems in place, you will never miss that trade.

Before we get more into it I just want to share the benefits of using algorithmic trading in the forex markets.

  1. Eliminates human emotion
  2. Trade your strategy in other time zones
  3. Trade multiple currencies simultaneously
  4. Execute you positions instantly
  5. Can be used by a complete novice trader
  6. Save valuable time creating systems
  7. Will turn you into a pro Forex Trader
  8. Make your profitable system into a signal service

The list just goes on and the benefits of automated trading is enormous. Just imagine setting up your automated forex system and running it like a business. This is how it should be and believe me, time slips away very quickly staring at the charts wondering when you will get that lucky break.

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Just what is algorithmic trading?

Algorithmic trading is a piece of software that automatically places trades for you. Algorithmic trading is also referred to as Automated trading or robotic trading, and also known as forex robots or expert advisors (EA’s).

The software is a mathematical algorithm written in a programming language based on a trading system. If you can spot a re-occurring pattern in a forex chart or have some kind of system based on break outs or indicators, it can be programed to place trades based on the criteria. A set of trading rules determines the trade entry and exit. Any kind of forex trading system can be programed and turned into an automated trading system.

These days thanks to technology you don’t have to be a programmer or a mathematician to write algorithmic trading strategies. So, don’t be intimidated because anyone can do this today, even a complete novice trader can program trading systems.

The main goal of a forex robot is to trade the markets for you. All it takes is a bit of time to develop it and set up, but once it’s running it trades on auto pilot with monitoring.

Forex Robots

Now before you go off searching the internet to purchase a Forex robot online its very important to note. Not all forex robots make money in fact 99% of the robots you see online will at best keep your account at break even. Most of them lose your entire deposit in a matter of weeks and a lot of them are scams.

Some of these forex robots can be bought for as little as $40 right up to $10,000 and you will have no idea if they work until you place it on your live account. There are a lot of internet marketers that don’t even trade that sell forex robots. They know some forex traders are so desperate that they will fall for anything that promises fortunes.

The automated trading systems that pro forex traders use are completely different from those you see advertised online.

How prop traders use automated trading systems and forex robots.

To start off with what exactly is a “professional trader” ?

A pro forex trader is someone that trades the market either for a living, an investment or as a fund manager. They are either individuals or work for small or large investment banks and proprietary trading firms.

Professional traders and prop trading floors have been using algorithmic trading for years and is what contributes to them being consistently profitable. Instead of sitting with their eyes glued to the charts just waiting for the set up they are creating more automated systems while their robots are trading.

You as an average retail trader can do this too by running multiple forex trading bots that make consistent returns.

There are three ways to write code to program forex robots.algorithmic trading ic markets

  1. hire a programmer which is quite costly
  2. learn how to code yourself which may take many years
  3. use software that writes the code in the background

The 1st way is very timely and is not something a trader wants or needs to deal with. A trader needs to have the ability to quickly test trading ideas without the need to consult their programmer. Its valuable time lost.

Traders need a way to be able to develop and test new strategies as they are thought of, so it can be put live as soon as possible. The last thing a trader needs is for months to go by before they can do any kind of live testing.

Pro traders create algorithmic systems by using software that writes the code in the background so you don’t need to have any programming skills at all. They are able to create and test multiple trading systems quickly keeping the systems that work and discarding the rest.

How much does an automated trading system make?

This is like the old saying “how long is a piece of string”. Honestly it really doesn’t matter how much a system makes as long as it has a low draw down to profit ratio. For example, it’s no good having a system that has a 10% profit per week and a 40% draw down. This kind of system will be unsustainable. The approach that pro traders take is – if your system is making 10% per month with a 3% draw down you have made it. With a system like this you would have every investor in the world knocking at your door.

The main difference between a pro trader and an amateur is risk management and profit expectations. A pro trader looks for sustainability and any means to reduce risk.

The thing is to have multiple low draw down algorithmic systems that make money around the clock and, all you have to do is research and create more trading systems in your spare time whilst keeping live systems monitored.

Is your time valuable and how long are you willing to wait?

I have known traders to test systems out for 10 years before going live. Spending countless hours trying to back test and forward test manually. I couldn’t possibly imaging spending 10 years of my life and still not being a profitable trader. But, there are 1000’s like that out there still running around in circles. With Automated trading, you can fully back test an entire system within a few hours and have it set up running within a few weeks or months.

The most valuable thing is life is time – you can never get that back and there isn’t a chance I would like to be waiting 10 years before I became a profitable forex trader, in all honesty who would?  The way out of this is trading like the pro’s do, by utilizing and incorporating algorithmic trading systems into your forex trading strategies.

automated trading

 

Please share any comments or thoughts you have. If you need any information please make a comment below or contact me.

 

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