Automated Trading System : Faster Execution Means Increased Trade Volumes in Forex
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The concept of automated Forex trading system is mind-catching.
Before the automation trading system of the Forex market, exchange-traded futures market was the first to switch on automation. Then, the traders on the Interbank spot FX market decided to follow the latest trend and also moved to the new system.
Automated Forex trading system allows traders to execute their trade on spot Forex market automatically and anytime of the day, based on existing technical indicators and custom trading rules. There are several characteristics included in the automated trading system, such as:
• Automatic trailing stops especially when the trader is losing in a specific trade position;
• Account equity management;
• Stop and/or limit orders;
• Discretionary market orders; and
• Several technical analysis indicators within your discretion for enabling trend-following systems.
Automated Forex trading systems supports most of the indicators (the technical support will depend on the technology, and also on the available features of the automated system):
• WMA (weighted moving average);
• EMA (exponential moving average);
• SMA (simple moving average);
• VMA (variable moving average);
• TMA (triangular moving average);
• TSMA (time series moving average);
• WATR (wilder’s average true range);
• VHF (vertical horizontal filter);
• Standard deviation;
• Trailing stops;
• Mass index;
• Fixed limits and stops, and others.
The success of the automation process to The Forex market is credited to several factors, as follows:
• Its ability to perform or execute trades in real time. Due to the automation, a trader can close trades in the market within a few milliseconds. This is impossible in manual systems, as previous trades are normally closed after several hours. Additionally, there are also instances wherein a trader incurs several losses in a row in the market that prevents him from making any fresh investments. Thus, with automated Forex trading system, this problem could be avoided.
• Its ability to greater diversification. Thanks to the existence automated trading system now in place, a trader can trade in various local as well as international markets within varying time zones. This means that you can place or close deals with different traders from various markets around the world even at the middle of the night.
• Its ability to analyze short-term data. This is not possible in manual trading system. Thus, traders using automated system have the bigger advantage since they can predict market trends in less than an hour.
The consequence to consolidate the features as well as the benefits of automated Forex trading system, will help you conclude the following: with the Forex market on automation, you will be able to place more trades on a single day, though increasing the average volume trades daily.
For further clarification on the conclusion. Let us take the following scenario: If you are trading using the manual system, you will notice that it takes time before a trader confirms if he will accept your deal or not. He will look on the market condition first as well as the exchange rate of the currencies that you are trading within the same market. Therefore, if it takes time before a transaction will be finalized; there would be fewer trade volumes.
Now, if you are using the automated trading system, the evaluation of exchange rates and market conditions could be done just in few moments, given that Forex data are now updated in real time. After less than an hour, you may be able to take your position whether you will push through the deal or not. If a Forex transaction per trader is averaging within an hour, a single trader can place as much as 8 trades within the regular trading hours (if he is following the day trading schedule) and additional trades beyond the regular trading hours. There are thousands of traders in just a single market that can place such average number of trade per day in the market. Combining it with the number of Forex markets around the world, the figure is huge enough.
The technology is changing continuously, though there is a tendency that the average number of trades per day will grow, thus a possibility of increased trade volumes on daily basis. With faster trade execution, that is a certain possibility.
Be thankful, the Forex market is now at the helm of automation. Now, faster transactions make earning money through the market trading easier.
If you would like to have more information please click here: Automated Forex Trading
Forex Trading: Trading on Autopilot Clever Technology
Why Forex trading?
This is probably one of the questions that you need a reasonable answer. There are hundreds of investments out there that you can prefer, but why choosing trading foreign currencies instead?
Forex investment is unique in several aspects.
Its trading volume is relatively big compared to other market. It has extreme liquidity or the capability of either buying or selling the currency without causing significant fluctuation in the market price. It has the largest number and diversity of traders. Forex is one of the markets that have long trading hours (24 hours each day, except during weekends. Trading locations are almost everywhere, not only in the United States or major cities of Europe. There are different factors that impact on foreign exchange rate.
Another yelling fact that will make you excited to go on Forex trading: it has an average turnover in traditional foreign exchange market of around .88 trillion daily, according to the Triennial Central Bank Survey of the BIS (Bank for International Settlements). Here are the daily averages of turnover on the Forex market corresponding to the last 17 years:
$500 billion (April 1989)
$750 billion (April 1992)
$1.18 trillion (April 1995)
$1.48 trillion (April 1998)
$1.16 trillion (April 2001)
$1.88 trillion (April 2004)
$2.80 trillion (April 2008)
From the figures alone, you can notice that the average trend of Forex turnover is growing. It is estimated to reach as high as 2 to 3 trillion dollars within the next 8 to 10 years, if the number of traders around the world will continue to increase. Everyone have the chance of getting a substantial portion of the Forex market wealth pie, especially that the Forex trading marketing is now on its automation process.
The concept of automation becomes the new trend to the Forex trading market. The Interbank spot market has also taken into consideration switching to the automated method as well.
There are several benefits that a Forex trader can obtain from automated Forex trading. Here are some of such benefits and figure out why Forex trading besides other investments (futures and commodities) like better the automated process.
Transactions can now be done in real time, through automated process. Although manual systems have existed for quite some time now, it is difficult to achieve the same benefits that the automated Forex system can offer to its traders. All of the trades can happen within a few milliseconds and can be a big plus for automated transactions against the manual system. Actually, there are problems that are addressed using automated trading especially if the trader is losing a few times in a row that prevents him from making new trades. Such problem could be addressed using the automatic trading system.
With automated Forex trading, you will have a greater diversification. It means that you can trade in several markets in different time zones at a time. You can execute trades with traders from Singapore or London even it is already 12 midnight in the United States. This benefit allows you a multiple model exchange alternative. You can use varying trading models to evaluate short-term data. This means that you will be able to anticipate the trend for a shorter period of time, let us say from fifteen minutes to half an hour.
As previously mentioned, the Forex market is unique because of its extreme liquidity. This liquidity is increased when the market becomes automated.
Risk management problems are solved through automated trading. International checks, which are commonly used in making purchases on Forex market, are synchronized through automated technology. Since the transaction in an automated process is now on real time, there is a small chance for delayed payments, reducing the risk of non-payment by either parties. Although there are problems noted with the use of the automated system, it can be arrange through consistently-updated technology.
With automated Forex trading market, the prevision of $2-3 trillion average daily turnover within the next 8 to 10 years can be changed within the next 4 to 5 years. Given the quick yet efficient trades on varying time zones, automated Forex trading will now be one of the existing lucrative business around the world.
If you would like to have more information please click here: Forex Trading
