As forex software becomes more complex and automation becomes more common, many traders now rely on mechanical forex trading systems. These software systems execute trades when certain market conditions are met, with or without the confirmation of the operator. These automated software systems look for technical market indicators and buy or sell accordingly – sometimes without any input from a human operator. As a result, they have become controversial. After all, the idea of a computer generating money while you sleep seems a little too good to be true.

But there are several reasons that automated trading is legitimate.

First, any profit you receive is because of value added work – you set up the system in an intelligent, informed way. Like any software engineer, you had to do coding, back testing, forward testing, and assume the responsibility for monitoring your program. All of that represents value.

Second, by accepting the profits for your system, you also assume the risk. If you designed your system well, you will do well, but if not, you also accept the tab. This risk is another part of the value that automated systems add.

Third, well-designed systems do perform a constructive role for the market, because they iron out volatility and push prices to more consistently represent value. A similar role is performed by independent, human actors, so what is wrong with having a computer do it instead?

Most importantly, there is a fundamental value to automated systems that applies to the people who design them. One of the most common critiques of mechanical systems is that they take the human element out of trading. But exactly the opposite is true, because the process of building the system helps every person who does it. Think of it this way – you can’t write clear, objective orders if you haven’t thought through your own strategy clearly. Unfortunately, many people have trouble articulating their strategy when asked for it, but when setting up a mechanical system, you are forced to describe your strategy in numbers or trading orders. The result is a clearer, more thought-out understanding of the method.