A forex autotrader is an automated system of trading on the foreign exchange market. A forex autotrader enables a hands-off approach to trading since it uses algorithms to trade. In forex autotrading, a computer program will execute a trade after analyzing price trends and deciding whether to buy or sell. The trader only chooses or adjusts a trading algorithm based on performance.

The forex market is a high-speed and high liquid market, which has made investors opt for forex autotrading rather than manual trading. This article will discuss how a forex autotrader works, its benefits, and its drawbacks.

How Does a Forex Autotrader Work?

Forex autotrading makes use of technical analysis through a complex algorithm to make trade decisions, as the one used for Malaysian broker Juno Markets.

For example, a trader can code a program and instruct it to buy a specific currency against another when the long-term moving average moves below the short-term moving average. Additionally, the trader sets the program to sell the same currency when it gains a specific amount of pips. Such a program can trade the currency pair without human intervention.

Advantages of a Forex Autotrader

Having a computer program analyze the market, identify opportunities, and trade for you has several benefits. These benefits include:

·       Minimizing Emotions

A forex autotrader will minimize emotions in the trading process. By minimizing emotions, traders can stick to their plans. Forex autotrading executes orders automatically, and once a strategy has been set, traders cannot hesitate or question the trade. Additionally, autotraders can reduce the tendency to overtrade and build confidence in traders who are afraid to trade.

·       Back-testing

In forex autotrading, the rules must be absolute. The program cannot guess and must be told exactly what to do. Traders are therefore able to fine-tune and evaluate trading rules before going live. Back-testing allows traders to test the rules on historical data without risking their money in live trading. Additionally, traders can determine the average win or loss per unit of risk.

·       Discipline

Autotrading automatically establishes trading rules and executes them, hence maintaining discipline even in volatile markets. Discipline is mostly compromised by emotional factors such as the fear of losing or the desire to make more profits. Autotrading also enables traders to achieve consistency.

Autotrading ensures that discipline is maintained by strictly following the trading plan. A forex trader will also eliminate pilot errors, such as incorrectly entering an order to buy 1000 shares as an order for 100 shares.

·       Increased Order Entry

Computers can quickly respond to changing market conditions and generate trade orders as soon as the set rules are met. Quickly getting into or out of a trade can make a significant difference in the outcome.

When the program enters into a trade, it automatically generates all other orders, including profit targets and loss-stop orders. Since markets move quickly, a trader can reach the profit target or move past the stop-loss before entering an order in a manual system. However, this cannot happen with a forex autotrader.

·       Diversifying Trade

A forex autotrader enables an investor to trade multiple strategies and accounts at one time. Such a technique allows traders to hedge against risk by spreading the risk over various trade options. Diversifying trades can be challenging for a trader using manual systems. However, a computer can effectively execute it in milliseconds.

Drawbacks of a Forex Autotrader

·       Mechanical Failures

A forex autotrader is a sophisticated trading method but still prone to mechanical failures. Losing an internet connection could make an order not reach the market. There may also be a discrepancy between theoretical trades and the platform that turns them into real trades.

·       Monitoring

Although trades are automatically analyzed and executed, autotrading still requires monitoring. Technical failures such as computer crashes, power losses, system quirks, and connectivity issues can still happen.

·       Over-optimization

A trading system may look good on paper only to perform horribly in the market. A strategy may work fine during back-testing, but in an attempt to fine-tune it, a trader may render it unreliable in live trading.


A forex autotrader is an ideal tool in trading, especially for passive and new traders. However, it is not an assurance to making profits or being a successful trader. All traders should back-test the program before using it in live trading.