The Forex trading system instantly executes trades on your behalf using the exact parameters that you have set. Learn how to create, retest and run automated Forex trading systems for platforms, including MetaTrader4 (MT4) and ProRealTime.
Defining Forex trading system
The Forex trading system is basically a set of rules used to execute trades on one or more currency pairs. While this system can be implemented manually, many traders use automated systems – based on computer code – to emit emotions from the equation and run trades more efficiently.
This automated trading (FIX) system is effectively a ‘trading robot’ that can monitor the market at any time, look for opportunities and carry out trade according to the specified script.
Make vs. Buy
You can create an automated forex trading system for many of the platforms offered by IG, including MetaTrader 4 (MT4), ProRealTime, and our regular online trading platform through the API. With MT4 and ProRealTime, you can also buy and install systems that were previously created by third parties.
Build a special system
The main benefit of building a custom system is that the practical options are unlimited – the only obstacle is your imagination and what can be encoded. However, building a bespoke system will require an in-depth understanding of financial, trade and technical analysis markets.
You also have to turn your system into code, although it’s possible to hire a developer after you design the system on paper.
Buy solutions outside the shelf
If you use MT4 or ProRealTime, you also have the option to buy off-the-shelf solutions, known as ‘Expert Advisors’ (EA) in MT4 and ‘automatic trading strategy’ strategies at ProRealTime.
Even though using one of these systems is much easier than coding a strategy from the start, it is important to research and test a third-party solution thoroughly to make sure it matches your trading goals and actually does what it says.
This is because many third-party solutions make bold claims – like being the ‘best forex trading system’ – but fail to meet the hype.
How to build an automated forex trading system?
If you decide to build your own automated forex trading system, here’s how to get started:
Make a trading plan
To maximize your time on the market, it is a good idea to create a detailed trading plan – a blueprint for your trading activities that can help you determine your goals and how your automated system will help you achieve them. Among other factors, it is important to consider:
- Which market (or market) do you want your system to trade
- When you want it to operate
- What should be the risk-reward ratio
- What strategy will be used
While it is helpful to have an understanding of what can be encoded, you do not need to have in-depth knowledge about coding yourself. This is because it is always possible to hire developers to make your system for you. You can use strategies development with any suite of free APIs. This is why should learn before with automated trading.
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