The foreign exchange (forex) market is the market in which participants can buy, sell, exchange and speculate on currencies. The market is combined with banks, commercial organizations, investment management firms, hedge funds, retail forex brokers and investors. Technology has revolutionized forex industry like any other business, particularly in regards to automation, artificial intelligence, blockchain and more.
Automated forex trading programs like algorithmic trading, black-box trading, robot trading can offer many advantages as it is designed to function without the presence of the trader by scanning the market for profitable currency trades. They use either pre-set parameters or parameters programmed into the system by the user.
Automated Forex Trading: Automated forex trading is a system of trading foreign currencies with a computer program based on a set of analysis which will help determine whether to buy or sell a currency at a given time. The trader is able to make decisions based on a set of technical rules. The biggest advantage of automated forex trading system is that it tends to reduce. Traders can also assess the viability of a trading strategy (backtest) to see how they perform based on past data. This will help fine-tune the strategies before using real capital. But one downside is that successful automated forex trading system can be difficult to develop.
Algorithmic Trading: Algorithmic Trading is done with mathematical formulas run by computers. These mathematical models with human insights can make decisions to buy or sell financial securities on an exchange.
Robot Trading: It is a computer program based on a set of forex trading signals that helps determine whether to buy or sell a currency pair. Forex robots are designed to the psychological element of trading.
Below are a few of the key selection criteria for traders considering automated programs.
1. Manage automated forex trading software to fit the needs.
2. Fees and guarantees- Fee transparency is one key quality.
3. Take testing of the software system- Since it is costly investment firms are providing video guidelines of the software programs. Run the tutorial or training function to see if it is adequate and answers all of the queries.
There are always potential risks when trading in any market, but automation software may help avoid serious losses.