Forex autotrading is a trading strategy where forex buy and sell orders are placed automatically based on an underlying system or program. The buy or sell orders are sent out to be executed in the market when a certain set of criteria is met.
Autotrading - and systems, or programs to form buy and sell signals -, are used typically by active traders who enter and exit positions more frequently than the average investor. There are also a wide range of systems that differ on the set of criteria used to generate buy or sell signals. Typically, the criteria used are more technical in format - in that they focus on price movement and technical indicators
Today, there are two major types of Forex autotrading:
Fully automated or robotic Forex trading: This way of autotrading is very similar to algorithmic or black-box trading, where a computer algorithm decides on aspects of the order such as the timing, price, or quantity or initiation of the order without human intervention. Users can only interfere by tweaking the technical parameters of the program; all other control is handed over to the program. A exhaustive list of commercial robots is maintained by the non-profit NDD Forum.
Signal-based Forex autotrading: This autotrading mode is based on the concept of auditing traders all over the world and making their strategies available to anyone interested in the form of signals. Then traders have the ability to automatically convert any of these signals to real trades in their broker accounts. Human interference here is augmented; signals come from live traders while users can actively select to follow a Signal Provider whose strategy fits their risk profile. Examples of such platforms are: ZuluTrade, Rent a Signal etc.
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