Forex traders around the world use the MetaTrader 4 (MT4) platform to trade forex and to analyse international financial markets. Developed in 2005, MT4 is arguably the most popular trading platform globally today. This is largely due to the advanced tools it offers and also its powerful automated trading capabilities.
In this article, we’ll look at what automated trading is and the benefits and risks associated with this form of trading. We’ll also take a small dive into what makes MT4 so appealing to all types of traders.
What is automated trading?
Automated trading (also known as algorithmic trading) is one of MT4’s most powerful features. It involves the use of computer programs to automatically execute trades on your behalf in the forex market. This type of trading has become increasingly popular as technological advances make it easier for almost anyone to access the market.
Expert Advisors (EAs)
Using automation, traders can develop and apply EAs, also known as trading robots, as well as technical indicators. An EA is a program that opens or exits positions based on pre-established instructions. Practically any trading strategy can be executed as a trading robot, optimising trading and market analysis where required. This removes the emotion of trading since trades are placed once the instructions have been met, mitigating adverse trading decisions.
Benefits of automated trading
Algorithmic trading offers several benefits to traders. Let’s discuss some of the most popular:
Speed
Automated trading enables faster execution of trades than manual trading, with increased accuracy. They can quickly assess markets and examine technical indicators, as well as carry out multiple trades simultaneously, increasing the opportunity for maximising profits.
Removal of human emotions
Automated trading’s biggest advantage is the elimination of emotions from the process of trading. Feelings like fear, greed, impatience and impulsiveness often result in poor trading decisions. Automated trading hinders the impact of these emotions by following predefined rules or criteria, leading to more consistent outcomes.
Backtesting
Algorithmic trading supports the backtesting of trading strategies using past data. Traders can compare how their trading strategies would have performed in the past, identify areas for improvement, and make necessary tweaks if required. This improves the effectiveness of one’s trading strategies and raises the probability of trading success.
Continuous trading
Automated trading systems can monitor the markets at all hours, even when a trader is away from their computer. They can track any number of currency pairs simultaneously and open (or close) positions based on preset criteria, without the need for human intervention. This ensures that no trading opportunities are missed.
Risks associated with automated trading
While automated trading offers key benefits, some risks may be incurred.
Dependency on technology
Like any other tool that relies on technology, the internet or electricity, automated trading can be disrupted by technical glitches, power outages or connectivity issues. Any failure in the system can lead to execution errors, which in turn can result in losses. This makes reliable hardware and robust internet connection essential to minimise the risk of any malfunction. It’s also important to have backup systems in place and to regularly monitor and maintain the infrastructure.
Over-optimisation
While backtesting is highly beneficial in terms of optimising your trading strategies, the risk of over-optimisation based on historical data is just as prominent. A strategy that is too finely tuned to historical market conditions may perform terribly in a live market. A balanced approach is key to ensuring that a trader’s strategy is robust enough to adapt to changing market volatilities.
Lack of human intervention
While automated trading can curb the impact of emotions in the trading process, the lack of human judgement and intuition can also be a drawback. There are specific instances where emotive rationale can play an important role in trading decisions. Particularly during economic announcements or unanticipated market events when automated systems may be unable to respond effectively.
Market risks
Forex trading comes with a high level of risk, regardless of the trading approach. This is largely due to the volatility of the forex market. Traders must therefore understand that no strategy, not even one that is automated, can prevent loss of capital. This is what makes prudent risk management practices so vital.
In conclusion
Automated trading offers many benefits to a trader. This includes speed, efficiency and the removal of emotional biases from trading decisions. However, this form of trading does come with risks such as mechanical or software failures, over-optimisation, lack of rationale, and other general market risks. Traders must properly understand these factors and carefully assess the suitability of automated trading for their specific individual needs.
More on the Metatrader 4 platform
The MT4 platform is renowned the world over for its innovative capabilities that simplify the complexities of forex trading. It delivers a flexible trading system to millions of traders worldwide, regardless of expertise. MT4 offers a high level of convenience because it is user-friendly, customisable and allows for quick and easy execution of trades. In addition, MetaTrader4 offers:
- an intuitive platform that makes forex trading easy for novice and experienced traders
- a simple interface with easy-to-access, robust functionalities including currency prices, indicators, signals, and charts
- stable performance, which is significant when even the slightest bit of downtime can lead to adverse trading outcomes
- flexible trading system with 3 execution modes, as well as two market orders, 4 pending orders, 2 stop orders, and a trailing stop
- strong analytical functions, e.g., 30 built-in technical indicators, 23 analytical objects, online quotes and interactive charts with 9 timeframes allowing for a quick response to any price changes
- powerful algorithmic trading
Become a T4Trade trader
T4Trade gives traders access to more than 300 tradeable instruments across 6 asset classes like forex, metals, futures, indices, and commodities. Traders can choose from a range of innovative accounts best suited to their trading style and expertise. Traders can also benefit from flexible leverage, tight spreads, mobile trading, in-depth market and news analysis, and other exclusive trading tools.’s T4Trade’s MT4 trading platform allows traders to test their trading strategies, using many of the platform’s useful features.
Boost your trading skills with T4Trade
Become a skilled forex trader and widen your scope of knowledge about trading through a comprehensive pool of educational resources on the T4Trade website. Access a range of useful videos, articles, webinars, podcasts and LIVE TV through the T4Trade Academy. Consult the broker’s FAQ page for tips on becoming a better trader.
Disclaimer: This material is for general informational & educational purposes only and should not be considered investment advice or an investment recommendation. T4Trade is not responsible for any data provided by third parties referenced or hyperlinked, in this communication.
