Advantages and Disadvantages of Automated Forex Trading

Programmed forex trading has become a common foreign exchange practice among all kind of forex traders, especially new traders. The versatility and scalability of the process has also made fx more profitable and popular. fusionex

What is Automated Fx Trading?

Simply, automated fx trading is the trading of currency pairs using automated software. The application constantly scans market feeds, price changes, news, graphs and pattern formations, and uses complex calculations using present and past market data to find profitable opportunities. These programs usually use superior traditional indicators and pattern analyzers to find pattern formations, bottoms, covers, crossovers, breakthroughs, trading volume level changes, spread discrepancies and arbitrage opportunities. On finding the opportunity, the software generates signals and automatically places orders to buy or sell. These automatic trading systems are also known as algorithms, black-boxes or robots.

As every trader’s goals, trading style and risk tolerance vary from others, these automatic systems require some consumer defined pre-determined rules for finding opportunity as well as for inserting trades. The rules range from anything from finding get spread around discrepancies to positioning the right order size for a currency pair. As well the features and set up of such systems differ significantly and the way they interpret the market nourishes also differ considerably. You will discover both web-based and system-installed algorithms available today.

Positive aspects of Automated Forex Trading

1. Unemotional and Constant Trading: As there is certainly very low, if not no, human interference in data interpreting and decision making, the standard human thoughts like greed and fear do not control any trading decisions. So trades will be more reasonable and consistent.

2. Time Vehicle and Absentee Trading: Dealers can trade twenty-four several hours a day and almost can go anywhere they want during trading several hours. Most trading software programs are totally customizable to make them customized to your trading style and requirements.

3. Faster Trading and Quick Capitalization: With automated systems, the buy or sell orders are located instantaneously. Because all conditions are pre-determined the purchases can be put so fast to capitalize on any prevailing market situations.

4. Good for Investors, Arbitrators and Newbies: Both equally speculation and arbitration needs fast respond to market movements and is extremely difficult with manually manipulated trading software. Also for new traders having not much trading knowledge and market experience, automated trading can be an improved option for testing the strategies, making profits also to avoid individual emotions.

Disadvantages of Computerized Forex Trading

1. Large cost and up-front investment: Most of the advanced automated trading systems are costly to buy or provides a package with some pre-requisites to meet. And the trader needs to invest in creating the trading infrastructure which include one ore more computers, high-speed web connection, ability backup and alternative back-up systems.

2. Not easy to understand and operate: To get a new trader or for just one does not having much technical knowledge can suffer operating the trading systems with multiple glass windows. Also setting the right rules and using the right parameters can be a little tricky.

3. Deals are as effective as the guidelines: As the analysis and trades are conducted in line with the pre-defined rules defined by the trader, the deals will reflect his trading knowledge and market experience. Fore example relaxed guidelines can generate many or false trading signals and tighter rules can create no signals whatsoever.

4. The trading systems change considerably and the fx brokers charge differently for automated trading. Also automatic trading is usually limited to a handful of very popular currency pairs.

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