There is a debate whether forex trader should use automated forex systems or have discretion in their trading. Purely automated forex trading involves the use of back testing and rules to generate every trade they make. Discretionary forex traders on the other hand use signals as an alert and then make a decision on whether to trade or not.
Automated forex trading involves having your computer make clear cut forex trading signals and the trader will not second guess the system. They will ignore all emotions and thoughts about the market and are disciplined enough to make the trades when the system alerts them to do so. Obviously not everyone is that disciplined and as such automated forex system software has been developed to completely remove the trader. These are also known as forex trading robots.
The major problem in automated forex systems is that it is impossible to program proven forex methodologies into an automated forex trading system. A good forex trader can see patterns in the market that a forex robot can not see. For example, I have yet to see a forex robot that can identify a hunch. Believe it or not but there are times when I can get a hunch that the market is not doing the right thing and I am correct. An automated forex system will never be able to do this. At least, not yet.
Another weakness of automated forex robots vs. discretionary systems comes in situations in the market that are fundamental in nature. I have yet to see an automated forex system that can identify how I should trade if there is an earthquake in Saudi Arabia that increases the price of oil. Many forex trading situations are created by fundamental reasons and the forex robot will probably not be able to identify these situations.
Automated forex trading is especially useful for the forex trader who has problems in executing forex trades. Many a forex trader never follows their own forex systems and end up getting paralysis when they are supposed to trade. The forex robot will aid such a trader in such a scenario by placing the trade as long as the trading signal has been generated.
If you have a problem finding time to trade your forex system, an automated forex system will ensure that you never miss any signal generated by your trading methodology. The forex market is a 24 hours market making it impossible for a forex trader to follow all the trades that his system is producing. Having a forex trading robot should take care of that.
Overall, it is hard to say what approach works. Forex traders make money both ways. I make an effort to have both a forex robot to trade for me, especially if I know I will not be following the forex market for long and discretion when I have time to follow the currency market. If you have a forex trading methodology that works, then stick to it.
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