An automated forex system should also increase his trading exposure in winning periods and reduce trading exposure during losing periods.
Money management system in automated forex trading is very crucial for the following reasons.
1. Preserving Capital
A forex trader who does not learn how to preserve trading capital is bound to lose it. Many forex robots only allow you to trade a system. Few are able to protect a trader's capital even when they are in a drawdown. A good forex robot should be able to have trading parameters that allow the forex trader to preserve his capital when the market is not in tandem with the automated forex system.
2. Adequate Capital
Other than preserving your capital during slow forex trading periods, a good forex robot should also ensure that the trader has adequate capital to trade the system.
There is nothing worse than a forex trader entering a trade without adequate capital. It is like going to a fast-food restaurant without the proper change to buy a burger. Sooner or later the undercapitalized forex trader will probably lose any trading funds they might have in their account. A well automated forex system will alert you to this scenario.
3. Set Reasonable Goals
A well automated forex system will have money management techniques that will allow the forex trader to set reasonable forex trading goals. Forex trading is a profitable endeavor but most traders give up when they do not achieve trading profit goals that were unrealistic.
A forex trading robot will allow the forex trader to have reasonable expectancy for their trading dependent on how much capital they have and also the performance of their robot.
4. Predetermine Loses
Many times a forex trader gets paralyzed when trying to exit a losing trade. It is common for the forex trader to exit winners too early but exiting loses is more difficult. Traders hold on to a losing position in the expectation that it will soon turn in their favor. My very first trades consisted of losing trades that were some 100 pips while my wins were in their teens.