Forex trading has changed since the introduction of artificial intelligence, robotic process automation, and the internet of things. The number of millionaires from forex trading has continued to multiply. This has created so many questions that remain unanswered.
First, you should know that, yes, you can succeed at the forex without auto trading. However, the possibility of winning from the venture is very minimal.
Therefore, what lies in auto trading? Why is it almost impossible to win without auto trading? This article highlights the role of automation in forex.
By the end of this article, you should have decided to continue forex trading with or without automation. What’s more? Let’s take a deep dive into the main content.
What is auto trading? Simply put, automation is letting machines trade on your behalf. You can deploy software to handle part or whole of the trading process. This can have an ocean of benefits and drawbacks as explained below:
Auto Trading vs Market Coverage
If you don’t automate forex trading, you will conduct technical, fundamental analysis. Without adequate analysis, you are likely to fail in forex trading.
Technically, you need to gather and analyze various charts. You should understand timeframes and a variety of indicators as you attempt to know how prices change.
Fundamentally, you should track political and economic happenings in your attempt to understand why prices change. Most of the time you will make investment decisions from what other investors claim to work.
This system of analysis makes you understand forex market operation. However, it has a flaw. You can gather limited information from the market. Besides, balancing technical, fundamental, and sentimental analysis is difficult.
On the other hand, an artificially intelligent machine can gather data at lightning speed. Depending on the training, the machine can grab changes in the market faster as well as simultaneously or quadratically. And here’s the more exciting part:
The software lacks emotions. Consequently, it cannot give the third eye to opinions while ignoring logical analysis. Therefore, it solves errors of ‘blowing the account’ that result from irrational decisions while forex trading.
Auto Trading vs Accuracy
Human judgment has two drawbacks. First, as a human being, you have reduced attention to details and span. The more time you take analyzing a product the more tired you become.
You are likely to make more mistakes if the process is repetitive and tedious. Secondly, emotions influence human judgment. Therefore, you are less likely to give a high degree of accuracy.
An auto trader, on the other hand, lacks an attention span. As long as you feed the machine with power and the internet, be sure to get accurate results 24/7.
Also, trading software is better in technical analysis. More to this, the result is likely to be accurate and can be crucial in minimizing behavioral finance investing. Nevertheless, this has a drawback.
Sometimes technical analysis may be inefficient in making investment decisions. Why? The high dynamism in the forex market may render past data less important.
Hence, there is a need to incorporate sentimental (human) analysis for maximum output. A less exposed AI (artificial intelligence) is likely to make analytical mistakes initially.
Once the system gets more exposure, it becomes better in reducing mistakes and is likely to triple your profit margins. Then, you are sure to realize the return on investment over a short duration.
Technological advancements have resulted in auto trading. Forex traders now have more freedom to undertake other investments, enjoy improved accuracy and speed in forex trading.
By automating forex trading, you can punch away biases of behavioral finance. Combining a wide market coverage and ability to trade large volumes per second enables you to realize your return on investment in a few months (if not days).
Therefore, although you can succeed in forex without auto trading, automation propels your earnings while making you a happier investor.