Basics Of Automated Algorithm Trading – 12TradePro


Automated trading or Automated Signal Entry is a phenomenon in the forex industry that continues to turn heads. Many are pro-automated trading, while others point out the faults of this system.

What does auto trading entail? Should you go for it or not?

The best way to make this vital decision that could fast-track your trading experience is by analyzing it as a whole. Looking at the pros and cons of automated trading, analyzing the details and some of its best attributes. Then determine if to jump on the moving train or not.

What Is Automated Trading?

The auto trade system is known by several names; auto trading, mechanical trading, and algorithmic trading, among others. Automated trading is a system of specific rules whereby computers execute entry and exit trades based on previously programmed instructions by traders.

With the automated trading system, traders get to program computers to automatically execute trade calls based on specific criteria. With a machine, entry and exit are precise as previously programmed. So, as far as your market analysis is good, and you put in the right rules, you get an accurate result. Not only does this system execute, but it also monitors trades. And this is applicable to forex, futures, and stock trading.

One of the biggest problems associated with forex, futures, and stock trading for traders is the emotions of trading. And many pro-auto traders will argue that automated trading eliminates emotions for traders.

The conditions attached to the rules of entry and exit for automated computers are either simple indicators or more expert strategies.

Also, automated computers trigger trades through specific programming languages on different trading platforms.

Setting Up Trading Rules

Remember, we had earlier talked about how automated trading works on trading rules programmed by the trader. Now, how does one go about setting up these trading rules that determine how the system executes trades?

Most trading platforms offer automated signal entry trading with preinstalled technical indicators which aid a trader in setting up auto trade rules. There are several technical indicators that make it easy to set up the exact point at the system to enter or exit a trade. For instance, trade execution is conditioned on the crossing of two moving averages in any given time frame.

Regardless of the default setting provided by trading platforms, most traders prefer to create a custom trading algorithm. Using the help of an expert programmer, they customize the software to their taste for auto trade. This allows for more flexibility of rules but also costs more.

Whichever form of trading rules a trader decides to go with, there remains the knowledge that no strategy is perfect. Forex, futures, and stock trading are all volatile markets and will continue to be volatile, as many factors influence their rate. Therefore, it is a standard disclaimer in forex that no strategy is a hundred percent (100%) perfect. It is a market of high risk, where capital is lost if there exists no proper risk and money management plan.


In summary, a trading algorithm can give profits today and lead to losses tomorrow. No trading bot, trading platform, broker, or strategy is fail-safe. You do not own the market; therefore, you do not control it.

Always enter the trading market with caution, have a plan, and follow it. Do not get greedy. There are so many manipulations in the forex, futures, and stock market. Do your analysis, and know the right point of entry, and the precise moment to exit, a minute delay can cause loss.

Forex is a very manipulative market that comes with massive gains and huge losses. Thus, forex is not for everyone; it is not a get-rich-quick scheme.