With it on, shots run in cycles. The first shot of a cycle picks its markets (the N with the strongest picks). From then on each of those markets trades in every shot until it wins once; a market that has won shows Won and sits out. When every market in the cycle has won, the cycle is complete: nothing trades, Auto-Fire switches itself off, and the Fire button turns into Start new cycle.
A market that loses trades again at a recovery stake, priced from Deriv's live quote so that one win pays back everything it has lost in the cycle plus what a normal win makes. So a completed cycle ends up by about one normal win per market; the status line shows where the cycle is now and where it ends when every market has won.
On Differs, the recovery trade is not another Differs. Differs pays only about 9%, so winning a loss back with it would need about 11× the stake, and about 130× after a second loss. Instead the market switches to Over 4 or Under 5 (whichever half of the digits it has shown more often lately), which pays about 95%, so each recovery stake is about 2× the last: 2.33, 4.86, 10, 21, 44, 92… at a 2.00 stake.
On Matches, the recovery trade is another Matches. A hit pays several times the stake, so each recovery stake is only a little bigger than the last, but Matches misses 9 times in 10 and long runs of misses are common. At a 2.00 stake, a market that misses 20 times in a row is at a 34 stake with about 210 already lost; after 30 misses, a 140 stake with about 900 lost; after 40, a 577 stake with about 3,800 lost. In a 10-market cycle, at least one market reaches 30 misses about 1 cycle in 3, and 40 misses about 1 cycle in 7.
There is no limit on how far a market keeps recovering. The only stop is your balance: if a recovery stake would be more than it, that market takes its loss and goes back to your normal stake (still in the cycle). With Auto-Fire, your Stop loss ends the run once a shot settles past it. Recovery does not change the odds of any trade, and over many trades it does not turn a loss into a profit.