What is your most precious possession in Forex? No it is not money. They are Trading Strategies! Your most valuable possession is time. In today’s fast-paced world, time is really all we have and the most important thing that we need to manage. The same is true for profitable forex trading. You need to be able to manage your time in the best way possible to yield the highest profits.
But with a market that is active virtually all the time day and night, how can you stay on top of things and still manage your time? Outsourcing, of course. No, we are not talking about delegating your trading process to a cost-effective worker in some less privileged country. We are talking about delegating trading to a robot.
Trading robots are software that can partially or fully take over your trades and execute them for you. In this article, we are going to take a look at this process and go over how you can create and choose the most profitable forex robot trading strategies.
Smart Trading Through Automated Trading
When it comes to trading bots, there is a certain amount of stigma out there among traders. Some might consider it a bad thing to use a trading robot instead of executing trades yourself. This preconception may have come to form due to some bad experiences that were themselves the results of less than ideal trading bots.
In actuality, provided that the trading bot is designed and developed in the right way, using them can be quite the smart way of trading. You see, there is a reason why this form of trading in the forex market is called automated trading or algorithmic trading.
First of all, you are using automation for your trades, which means you are delegating the actual process of trading itself. This can be quite the upside especially in the case of the foreign exchange market, which as we mentioned is virtually active all the time, also having the highest trading volume across financial markets.
It can also be particularly beneficial and useful for traders who do not want to dedicate their whole life to trading. Let’s face it, there are many traders who dabble into several different markets at the same time, which is a good thing since you should never put all your eggs in the same basket. So using automated trading can give you the time you need to spend on other financial venues.
On the other hand, if the algorithm behind the bot is developed in the right way, you can rest assured that all your trades are executed perfectly and precisely the way they should, which is what you get with automated trading tools such as XauBot Pro, where you can define numerous initial inputs for the bot to execute trades based on them.
Now let us turn to see what different types of trading strategies there are and what the most profitable trading strategies for forex robots are.
You should read: Understanding Algorithmic Trading Robots
Different Types of Forex Trading Strategies
In order to pick the best trading strategy, you first need to know what different strategies there are in the market. Once you know them, you can see how you should choose the one most fitting your conditions.
Trading strategies are divided based on different factors that affect the outcome of trades. In this section we will see some of the major trading strategies implemented by forex traders.
- Trading based on news
This form of trading is rather useful in the world of forex. The reason for it is that the foreign exchange market, being composed of foreign currencies, is quite under the influence of economic factors. As a result when something happens on the geopolitical scale that impacts the economy that can impact the forex market as well. So traders can use the world news to make their trading decisions. This is also true about economic data releases, such as growth domestic product, consumer indices, and interest rates, among others.
- Trading based on trend
Another popular trading approach which encompasses several trading strategies itself is known as trend trading. As the name suggests in this trading strategy, market trends are taken to be the most important factor as the basis of trading decisions.
- Trading with high frequency
Yet another form of trading that is seen a lot with forex traders is a category known as high frequency trading. Again, as apparent by the name, in this style of trading, traders will trade with a really high frequency, which can at times be executing trades in a matter of seconds. Popular forms of trading include day trading and scalping.
These were some of the most widely applied trading strategies in the forex market. Now we will discuss how you can pick one of them.
You should read: Common Technical Challenges in Forex Robot Trading
What Factors to Consider When Picking a Trading Strategy
Given that you have an ideal understanding of trading strategies, it is time to pick one of them. But what should you consider in this process?
Among the most important things that you need to keep in mind when picking a profitable forex trading strategy is how much time you have. Different forex trading strategies require different amounts of time to execute. So it is important how much time you can allocate to trading.
On the other hand, you need to consider your personality and personal characteristics. Are you a risk taker? Then you might be able to opt for scalping. Are you a really cautious person? Then it might be best to opt for position trading.
Most importantly, you should consider your initial capital. This is also very important in defining the outcome of your trading strategy. Some strategies require a much higher initial capital, while others can be started with even small amounts.
You should read: Top Forex Trading Robots in 2024: A Review
Can You Create Your Own Automated Trading Strategies?
So far, we talked about forex automated trading, different trading strategies that can be profitable in forex, and also what different factors to consider when picking a trading strategy.
Now the question is, can you create your own forex robot trading strategy? Yes there are tools that allow you to directly create your own automated trading strategy, such as the tool provided by TradingView with its own proprietary programming language. With the help of this feature of TradingView, you can create trading strategies and even whole trading robots. And you can even share them with other people.
There are of course other platforms that let you create your own robot trading strategies. But they do require you to have a basic understanding of programming and relevant languages.
Forex trading robots can be used to bring speed, reliability, and steady profits to your trading process in the forex market. There are ways you can create entire trading bots from scratch or develop automated trading strategies. But you need to consider important factors when trying to pick or even create a trading strategy, such as initial capital, time, and even your own personal traits.