Automated forex trading — is trading that happens automatically, without trader's intervention according to a predetermined algorithm.
Often the time to execute a trade is only a few milliseconds. A human cannot open or close a position at such a high speed, but trading robots, which react quickly and accurately to incoming trading signals, are excellent at this task. Special software opens and closes orders independently, following either the algorithm (expert advisor), or reacting to trading signals coming from their providers, which are other traders or their trading robots (advisors).
The signal can be compared to good advice: what currency or financial instrument should be bought to make a profit. A trading signal is information about opening or closing a deal (position) on a particular financial instrument.
Reacting to the signal, the automated trading platform installed by the trader makes a deal by itself, buying or selling the asset (currency pair) specified in the signal.
There are paid and free signals.
Other traders or their trading robots (advisors) act as trading signal providers.
Experienced traders have unique knowledge and experience and offer other, less experienced colleagues to use the results of their work. The large volume of trades on the forex market allows some traders to share information about their trades with other traders, whose experience is not enough for successful trading in the foreign exchange markets, without prejudice to themselves.
The vast majority of trading signals are generated by trading robots (advisors) that use complex proprietary algorithms to trade in financial markets. The task of an experienced trader is to constantly improve these algorithms, and the result of this work he sells to subscribers of trading signals.
Signal providers can provide signals on a paid or free basis. Users of trading signals are only required to make sure that the signals they receive actually bring profit, because knowledge and experience are no guarantee against potential losses.
The most difficult and important task for a trader who uses trading signals is the right choice of their provider. There are ratings of trading signals, using which the trader can choose the most suitable provider.
Signals and, in fact, transactions to buy and sell assets describe a particular trading strategy. It can be either conservative or on the contrary — aggressive. The first promises greater reliability with less profit, the second, on the contrary, is focused on maximum profit at high risk. The signal you choose must match the trading strategy you are pursuing.
Another important factor is the trading history of the signal provider, it shows how stable his trading strategy is and whether following it leads to a positive result.
Trading signals may be free or the provider may charge a fee. There is no need to wait for a miracle from free trading signals as a good product cannot be free. However, a high subscription price for signals cannot be a guarantee of quality either. It is necessary to look at his trading history, and be extremely cautious in its absence — an expensive strategy can turn out to be unprofitable.
Automated trading programs can be used by all traders. For a long time, professional forex trading is not carried out in the "manual mode", when a trader places orders by clicking a mouse. As a rule, trading robots open and close trades, while traders only observe, intervening in their work if necessary. Robots do not get tired and do not get distracted, do not make random mistakes and have faster reaction time than humans. That's why automated trading is widely used by professionals.
Automated trading, especially signal trading, is a great opportunity for beginners to quickly start trading forex.