Forex Mechanical Trading Systems

A Forex Mechanical trading system is a software that can watch the market for you, take all the decisions and trade directly on your broker. Most automated trading systems on the market are EAs for MT4.What are the advantages and disadvantages in using this king of trading system in your trading?Advantages:1.With a simple installation the software does all the work for you. It analyses the market 24 hours a day, looks for good opportunities and trades for you. The only thing you need to do is to leave your computer on and he’ll do all the work for you.2.Usually, on this kind of software, you can easily backtest the strategy. With 1 or 2 clicks of a mouse, you can know exactly how a system performed in the last years. You’ll see all the trades this system generated, how much money he was able to win or lose, and even analyze the maximum drawdown of previous years.3.Usually, the mechanical trading systems allows a user to define some key points like, for example, the maximum risk a trader is able to let the software use. This way you can improve your system so that it performs better and face fewer risks.4.The price of this kind of product is an advantage as well. Considering that just a few years ago this kind of product price was of thousands of dollars and nowadays there are some good automatic trading systems that cost less than $100.Disadvantages:1.Since these mechanical systems are based on technical analysis there is no guarantee that they can keep performing as well as they have been performing in the past. So, no matter how good the previous performance is, you can never be sure how this system will behave in the future.2.A software can’t think like a trader. It can analyze charts and manage your account, but it can’t analyze news or political events. So, if there’s a major shift or economic event, while a trader can adapt his strategy, the mechanical systems might not be able to adapt to the new kind of market.Since automatic systems do all the work for you, you can get dependent on it. This would be bad if the system stops working and you need to adapt it to the new market conditions.