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About FOREX Automated Systems

by Danielle Odom

Overview

FOREX is the foreign exchange market.

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The FOREX, or foreign exchange, market is the term used to describe the trading of currencies around the world. FOREX trades add up to more than $3 trillion a day. The market trades 24 hours a day, 5 days a week with the leading trade centers being Sydney, Tokyo, London, Frankfurt and New York. There are many ways for a new trader to jump into the market, one of which is automated trading software. If you want to learn to trade on the FOREX market, check out automated programs to jump start your investing.
Function

FOREX signals are buy/sell recommendations, produced by a number of companies online that indicate to a trader how the market is moving and is expected to develop. Using these signals, the trader would make the trade when it would be most beneficial. The automated programs monitor these signals and interpret them according to the risk-setting you have entered and the method of trading you have chosen. Then, using these signals the program makes trades for you without you having to approve them.

Details

An automated trading program uses pre-specified strategies to find conditions favorable to make a trade. Trades can be secured with a fixed stop-loss (a fixed amount, set by the user, to set a maximum loss amount), and these systems have been tested in historical situations as well as live up-to-the-minute situations.
Benefits

One of the best things about the automated systems is that you are not tied to the program watching the market at all times. The software will act as a broker on your behalf and make trades for you. The software trades consistently, without hesitation and without the indecisiveness of a human to hold it back, allowing your profits to increase.
Risks

The risks of using an automated system are relatively low compared to trading on the stock market. For example, assume that an automated system has a proven win ratio of 85 percent with a risk-setting of 1 to 3 percent. This means that if you choose this system it will make on average two trades a day and be successful 85 percent of the time. The risks also depend on if you run the software from a company server or your own Internet connection. Your connection is more likely to go down compared to a large server, and the software may miss out on trades while it is down.
Managed FOREX vs. Programmed

Automated trading can be achieved through a managed FOREX account, where teams decide on the buy/sell signals or use an automated software program that has been "taught" what to look for before making a trade. The outcome is similar; the difference is that the group of people usually handle more than just your account. The other option available to you is to program the software yourself. If you have a preferred trading system, you can use programming language to tell your software what to look for.