What You Should Know About Automated Forex Trading
What You Should Know About Automated Forex Trading
Currency trading, also known as the foreign exchange market or Forex, has exploded in size and popularity. Expansion of access to the Internet and communication technologies have encouraged growth in the retail Forex market. Hundreds of brokers service the retail or small to medium investor who wishes to trade Forex. Forex can be traded with a few hundred dollars or hundreds of thousands of dollars. Currency trading pits one country's currency against another country's currency in what is called a pair. There are seven major pairs that trade 24 hours a day around the world. Automated Forex trading has evolved as a result of smaller traders wanting to be players in this market.
The first automated trading was to have a broker manually place trades for a managed account under a given system. The broker employed traders who were CTA's to follow the systems and execute trades. The next step in automated trading, which is still used today, is for the broker to have a prescribed system where the investor executes the trade based upon the signal from the broker. The new frontier in automated Forex trading is the use of expert advisors or EA's.
By and large the retail investor is unsophisticated and has not spent the hundreds of hours over many years required to become a profitable trader. But with the advent and growth of automatic trading through expert advisors the retail investor can trade Forex from day one.
An automatic Forex trading platform requires no actual trading by the retail investor. The computer monitors the market at all times and places trades at any time of the day or night, regardless of whether the investor is watching or not. The investor only needs to select the strategies that he or she wishes to employ, plug this into the expert advisor, and let the computer do the trading. One of the biggest advantages of automatic trading is the elimination of human emotions and the constant psychology that needs to be employed to properly execute profitable trading decisions.
The number of expert advisor programs are numerous and varied. The investor should take the time to learn the strategies employed by an expert advisor that he or she wishes to employ in trading the Forex market. Some of the strategies that expert advisors use are swing trading, trading from Bollinger band to Bollinger band, stochastic extremes, scalping trades, momentum trades, moving average trades, and many more. You should compare the different claims and strategies to determine which may be the right path to follow.
Automatic trading and the use of expert advisors in the Forex market may be the proper avenue for the retail investor to begin trading in the largest financial market in the world. Always use proper money management and take the time to do your due diligence before committing your funds at risk.