One of the most difficult things in Forex Trading Strategy, in any domain is knowing where to start. So if you are new to bot trading or automated trading in the forex market, it can be a bit confusing knowing exactly where to begin and which bot to choose. And indeed there are multiple different types of trading bots.
What you need to know is that each type of trading bot is more suited for trading in a certain market condition and perhaps even for a certain trading pair or pairs. This is because trading bots are developed based on different trading strategies and trading styles. So you need to know the different types of trading bots in order to make a well-informed and proper decision.
So read along as we discuss the different types of bots and how you can employ them for a diversified trading experience in 2024.
Scalping in Forex Trading Strategy
Undoubtedly, one of the most popular trading styles is known as scalping. This is true for both manual trading and also algorithmic trading with bots. The reason for its popularity can be seen in its short term approach to trading, whereby trades are executed in the fastest time frame possible in order to obtain the most immediate profits that are seen in the market.
There are many forex trading bots that employ this trading style. According to scalping, trades are made right when a trend or momentum is about to take shape on the chart. So the position is opened right at that moment and when the newly formed momentum is fresh, profits are so-to-speak scalped right off the top and then immediately the position is closed.
As you might have guessed, with this form of scalp trading, profit margins are thin. But the advantage of this form of trading is in the speed of trades and also the sheer number of trades that are executed. This is true for all high frequency trading approaches.
Of course another big advantage of this approach to automated trading is that you can start with small initial capital and the bot can take it into the market for you and slowly build it up with added profits.
A prime example of a trading bot that employs this trading style is XauBot Pro. The way XauBot Pro has been able to provide top notch automated scalp trading is through its advanced technical analysis methods. Therefore, it is able to pick on the exact right moments to enter a scalping position.
You should read: Setting Stop-Loss and Take-Profit Orders with Forex Robots in 2024
Martingale or Multi-level Forex Bots
This category of forex trading bots gets its name from the strategy of trading known as Martingale trading. It is a famous betting method whereby you keep doubling your bet in the hopes that odds change in your favor.
But how does it work with forex bots?
Forex trading bots or expert advisors that trade based on this trading approach will, as mentioned in the beginning, basically double down a position whenever it doesn’t turn out to be what was predicted. So if the position that has been opened is not in the direction of market trend, it is not closed, but rather a new position is opened.
This new position that is opened will be double the size of the previous position and with a new bid or ask price, depending on whether you are going short or long.
Basically with the help of the Martingale or multi-level trading approach, forex bots are hoping to average out the unfavorable predictions made that went against the market trends. Therefore in the final analysis the average of the positions opened will be in the favor of the trader, in this case the trading bot.
Let’s take a look at this type of trading with an example. If you short the EUR/USD trading pair in the forex market at 1.08, you open your new position with the double size of the previous position at 1.07. This process continues, theoretically, with each position being double the last one and the offer going lower to 1.06, 1.05, and so on. Even though the offer for this short position is going lower, the size of the positions is being doubled.
Now keep in mind, this is just an example for the sake of learning. But even in this situation where we are shorting the pair EUR/USD even if the trend in the market does not turn on our side, we will profit in the end, due to the average offer for all the positions opened.
There are certain expert advisors that employ this type of trading. One such EA is XauBot Pro, which also offers multi-level trading as one of its major trading approaches. Of course, as we saw above, you can also set this trading bot to trade with the scalping approach. This decision is up to the trader and must be made by considering various factors, including risk level, initial capital, and profit targets, among others.
You should read: Managing Drawdowns: Strategies for Forex Robot Users in 2024
EA Forex Trading Strategy Many Pairs Simultaneously
Although technically speaking this is not an approach to trading in general, it is, however, a serious automated or algorithmic trading approach. The majority of forex trading bots only support a handful of trading pairs in the foreign exchange market. And out of those handful, they are only able to trade one at a time.
But with an automated trading tool such as XauBot Pro you will be able to trade many pairs simultaneously. And indeed this is a great trading strategy for not just diversifying your forex trading but also increasing your chances of profiting.
The expert advisor XauBot Pro is compatible with all the currency pairs in the forex market. So you can trade all of them with this bot. But more importantly, XauBot Pro is able to trade up to 5 pairs at the same time, thus giving you the chance to diversify your investment in the forex market easily.
You should read: Forex Robot vs. Manual Trading: Which Is Better?
Conclusion
Some phrases are used so often, they almost lose their potency. But nonetheless they are true. The same can be said for the phrase do not put your eggs in one basket. So if you want to use an automated trading approach in forex, make sure to bring the required diversity to protect your assets and increase your chances of profitable trades. With XauBot Pro, you have a forex trading bot with the highest degree of diversified trading through approaches such as scalping and multi-level trading in addition to compatibility with all forex pairs and the ability to trade multiple pairs at the same time.
