Elements of an automated trading strategy

Elements of an automated trading strategy

automated trading

  1. Introduction
  2. Strategy logic
  3. Input and output signals
  4. Market conditions
  5. Leverage
  6. Bonus tip: Learn from the experts


How to start automatic forex trading, with both free and paid options, plus the steps for getting started in MetaTrader, we'll outline four elements that can help you choose the best-automated trading strategy.

Keep in mind that these elements do not guarantee the effectiveness of any automated trading strategy or trading robot, they are just a guide to getting started. However, following these steps will help reduce the emotional aspect of your trading and maintain your trading discipline.

Strategy logic

The first thing to consider before an auto-trading strategy is the logic behind the strategy. Here it is useful to consider:
Objective benefits

• Risks

• Stop losses

• Pushing force

• Rank

• direction

Never underestimate the market conditions in which you will implement your strategy. Not all strategies work in all market environments. You must first think about the environment you are in, and then apply the strategy that works best.

Input and output signals

A large number of traders spend a lot of time worrying about the input and output signals in an automated forex strategy. It is important to understand the general logic involved in the strategy, although we must not overestimate every process the strategy undertakes.

Overall, this strategy is the start of the next hundreds or even thousands of operations. Try to analyze the performance of operations as a whole, not individually.
When you review your operations:

1. Put the win and lose in different places.

2. Calculate the average wins and losses, considering a group of at least 10

3. Ask yourself: The net result of my last ten operations was positive or negative. How many points did I generate or lose?

4. Try to repeat winning operations with higher returns.

Market conditions

There are two different types of market conditions. We will define these conditions as follows:

• Trend markets

• Field markets

These two conditions are mutually exclusive. When the market is in a trend, prices are steady and advance in the same direction. An uptrend is a trend that has higher highs and lower lows, while a downtrend contains a series of lower highs and lower lows.
On the other hand, bands form when the market does not move up or down but the price consolidates. Generally, the price oscillates between the upper and lower bound, known as support and resistance levels.

When choosing an automated trading strategy, neither type of market is better or worse - the only thing that should worry you is the type of market condition that your automated forex strategy depends on.


Now let's see the last item on our list: leverage. This is an area that automated forex operators often miss.

Most of the time, traders expect a lot of automated trading strategies before using them. This can lead them to trade with high levels of leverage. Although leverage has the potential to amplify your profits, it has the same magnifying effect on any losses.

The danger with automated trading software is that many traders only tend to look at the positive aspects of the strategy and ignore potential losses. This then results in choosing higher levels of leverage than they should be based on their available capital, and can quickly lead to large losses if market conditions change or the forex robot does not work as expected.

That is why, when using an automated program, we suggest using effective leverage no more than 10 times. If you are just starting out, you can consider a lower tier, say 5 times the amount you want to invest.


The benefit of using lower amounts of leverage is that if your forex strategy goes down, you are only risking a small portion of your account, and, accordingly, you will have much more capital to negotiate, compared to using greater amounts of leverage.
We hope this checklist helps you achieve a successful auto trade. You will start correctly implementing the best-automated trading strategy with the correct leverage and performance expectations.

Bonus tip: Learn from the experts

If you really want to take your trading to the next level, the best way to start is to learn from those who have been where you are right now. The good news is that you can do this with our free webinar series, Trading Spotlight!

Three times a week with three professional traders, Trading Spotlight takes a deep look at the world's most popular trading topics.