Tuesday, August 7, 2018

How Automated Systems Have Evolved Forex Trading.


"Have automated Forex system become important in the trading markets?
In order to answer that question we must glimpse at how big the Forex market has become. From that perspective we will understand the importance of automated systems.
It is general knowledge that The Forex market in terms of daily turnover and revenue per trader is the largest in the world. It is also comprised with greatest number of players.
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 participant in the currency markets.. Banks service both speculative traders and commercial transactions for business purposes.. Large banks can trade billions of dollars in the Forex markets daily.. Some of the trades are undertaken on behalf of their clients, but most are through proprietary desks.

COMMERCIAL COMPANIES- these commercial companies trade minor 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 influenced by the transactions of the commercial companies.

CENTRAL BANKS- central banks play an important role in the Forex market. This results from the fact that they control the supply of money, interest rates and inflation.. more importantly they set ranges that they would like their currencies to trade in.. 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-these firms commonly manage huge accounts on behalf of their clients such as endowments and pension funds. 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- are responsible for fraction of the Volume of the Forex Market.. Forex estimates retail volume of between 25 to 50 billion dollars each day, which is estimated to be at 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 play an important role shifting the risk to individuals who do not want it..
In Forex market alone, these are the six major players participating in the $1.8 trillion worth of daily volume. With such large volume and player and the fast and furious action be these participants it becomes obvious why a automated Forex system is a need.

The major players mentioned above used automated systems for their transactions.. Since they focus on the price fluctuations of various foreign currencies in order to profit, the real time data analysis will help them determine trades that will give advantage to them.
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 plain trading systems that do not approach the sophistication of the trading robots. Additional features are not typically free and get more expensive as more are added.

There are two types of automated Forex trading system:.
Desktop-based system- all Forex-related data are stored on your desktops hard drive. This system is unpopular to Forex traders because all data are vulnerable to computer virus contamination and other security problems. Worse case scenario is if your system crashes and you did not make a backup you have lost all your data. However, it is little expensive compared to the other types of automated trading system.
Web-base systems were the security and data protection are supplied by the service 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. Among the advantages is the speed in which it can react to market movements and be aware of many more variable a trader could possibly be. Today's markets are characterized by millisecond movements and not using one of these robots will always leave you one step behind.. These robots are program for profitability and have the advantage of removing human emotion from trading which is the demise of most traders."