subject: Why trading Forex without a Robot can be a complicated obstacle [print this page] Why trading Forex without a Robot can be a complicated obstacle
Have automated Forex system become important in the trading markets?In order to properly answer that question, we need to look at how the Forex Market has grown.. From that perspective we will understand the importance of automated systems.It is well known that the Forex market is the largest market that spans the world not just in terms of average daily volume and average revenue per trader. It is also comprised with greatest number of participants.
The following are some of those that regularly trade inf the Forex markets for one purpose or another.
BANKS- are more than deposits and loans, in fact they are a major player in the currency markets.. Banks cater both to large quantity of speculative trading and daily commercial turnover. Well-established banks can trade billions of dollars worth of foreign currencies everyday. The majority of the trades are through their proprietary desk although some of the trades are transacted for their clients.
COMMERCIAL COMPANIES- these commercial companies trade small quantities of foreign currencies compared to larger banks and their trades produce small and short-term impact on the market rates. Nonetheless, the long term trends of exchange rates are affected by the transactions of the commercial companies.
CENTRAL BANKS- central banks play an important function in the Forex market. This results from the fact that they control the supply of money, interest rates and inflation.. In addition, they have also official objectives rates for the currencies that they are handling. One of their functions of central banks is to stabilize their currency through the purchase and sale, or intervention, in the foreign currency markets. Their intervention in the market is enough to stabilize a certain currency.
INVESTMENT MANAGEMENT FIRMS-The managed by these firms include pensions funds and endowments and are typically very sizeable.. They are using the Forex market to facilitate transactions, specifically in foreign securities. Normally investment managers who hold international equities need to hedge their exposure by buiyng and selling currency pairs.
RETAIL FX BROKERS- manage a small amount of the Forex market volume. The estimated volume from retail transactions is estimated to be 25 to 50 billion dollars which is just 2% of the total market volume,
SPECULATORS- These are the participants who speculate and profit on price fluctuations during a given period of time. They perform the important role of transferring the risk to individuals who do not wish to bear it. .
These six major contributors actively trade in the $1.8 trillom dollars changing hands each day. With a large number of Forex players, there is really a need in switching from manual to automated Forex trading system.
To the aforementioned major Forex players, the automated trading system is of great benefit to the speculators. Their principal objective is to catch price fluctuations between the currencies and make a profit from them, the automated systems allow them to stay ahead of the markets.
Several automated or robot system exist currently. Some of these systems are free as part of a traders account and provided by the brokerage firms.. These systems are simple trading systems that do not approach the sophistication of the trading robots. If you are looking for more features, you can obtain it through additional payments.
The two systems for Forex trading are:.
Desktop-based system- all Forex-related data are stored on your desktops hard drive. The risk of viruses and other external threats makes these systems unpopular.. Worse case scenario is if your system crashes and you did not make a backup you have lost all your data. The advantages is that is inexpensive, but that might be more costly in the long run.
Web-based system- the security of your Forex account and other data are provided by your web-based provider.These are secured servers.. It is also convenient in the sense that there will be no software required and it is universally compatible with your Internet browser.
Forex robots represent the most intriguing way to trade and have become almost necessary. Your learning curve is greatly decreased and the robot is able to react much faster and can be aware of many more variable then the human eye. Markets move at lighting speed and the only way to trade effectively and be profitable is by using one of these robots or you will be at a great disadvantage. The demise of most traders is injecting human emotion into their trades, these robots do not have these problems
