Automated Forex Trading – Is It The Future?

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Can computers really replace humans in doing delicate and extremely difficult tasks such as trading? I believe the answer is no, certain tasks such as translation, problem solving and trading can be aided by computers and have been to a great extend, but they can never be carried out exclusively by computers. That being said, you have to realize that forex trading is not the rocket science you think it is, it’s easy to simulate, and easy to design algorithms and computer programs for. The task is to save time, and not sit at a computer screen all day long, let alone that the forex market trades 24/5 so one day is not enough, you would have to trade 24h to be as efficient as these forex robots.

80% of the time the forex market doesn’t go anywhere. And that is why automated forex trading is so powerful.

That’s right! You can find out for yourself and see that it is real. Watch a currency pair on a 5 minute bar chart, (each bar represents 5 minutes of trading) watch it for 2 hours or just mark one point, and after 2 hours go back and check, count the number of bars from that point on. What you will find is that out of the total 24 bars of the 2 hour period, only 4-5 bars show price trend!

Only 20% of the time it trends. That’s really boring to wait for. This is really boring for active forex day traders, fair enough they can wait for news release times where volatility will be higher but even then it can take as long as 3 hours waiting time to capture just 3 trades of only 10 pips each, a total of 30 pips, not counting the frustration and the actual cost of these 3 hours. If the trader made $30 on these 3 hours, that is not a good deal! He took a risk to make this $30 and his 3 hours are also worth at least $20. Even if he worked at McDonalds he would have made a sure, stress free $20 for that time, and at least he would have the chance to date one of those lovely girls working at McDonalds, instead of growing older in front of his computer!

For that remaining 20% of time where the forex market will make its moves, and these can often be really wild moves of 80 and 200 pips, this is where the forex trader wants to automate things. A good forex robot can pick up 30% of these 80 or 200 pips, no matter if they happen at night or while you are away in another job. That is around $24 to $60 per eligible 24h period, at virtually no risk! I say per ‘eligible’ 24h period, because certainly there will be days where no opportunity will show up, the markets may move but the move is not tradable, so you have to be realistic in your expectations.

Automated forex trading cannot make you rich, but it can provide you with a second salary! It will help you get your social life back, which I have found is the hefty price we all pay in many high paying jobs, so why live in front of a computer?

This entry was posted on March 28, 2010 at March 28, 2010 and is filed under Automated Forex Trading. You can follow any responses to this entry through the RSS 2.0 feed.