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Pros and Cons of Automated Forex Trading Systems

May 19, 2009 by  
Filed under Forex Market

The appreciation and depreciation of currencies refers to changes in currency values as determined by the exchange market not the banking houses as many people think. For example, in 1998, in an attempt to pay loans at a higher value, the Russian Central Bank announced that the ruble would be depreciated for a set period. The exchange rate at that time was approximately 6 rubles for $1 USD. The intention was that the exchange rate would change to 9.5 rubles for $1 USD this was supposed to be a 35% depreciation. However, the announcement created a panic amongst the Russian population, and resulted in the ruble depreciating in one day at 25% more than the Russian Central Bank had intended. The lesson to be observed here is that market panic can affect currency rates both higher and lower than any method that governments might be trying to control.

Maximizing your income and minimizing your losses on the Forex market are achieved through careful and astute management. It is a common belief by many that price movement and people behavior follow the trends of certain mathematical theorems (Elliot, Fibonacci), therefore making them predictable. Following on from this reasoning a number of experts created various automated Forex trading systems for currency, based on specific mathematical functions. The automated Forex trading systems have some advantages, but they can be very risky, and you really need to know what you are doing. If you are contemplating buying one of the Forex robot systems make sure you research it thoroughly beforehand and know exactly what sort of performance to expect.

Automated Forex trading systems are recommended by some as being appropriate for those who are only trading in smaller amounts. The mindset behind that recommendation is that people only trading small amounts will not be watching the markets continuously to check on the moves. I personally think that opinion could be disputed by quite a few smaller traders, who will often watch the market vigorously not only to protect their trades but often as part of their learning curve before moving on to bigger investments.

Automated Forex trading systems are particularly useful if you are an experienced trader and can actually understand the directions of a particular market. However, getting to this point can take a number of years experience. Many Forex platforms will allow you to create your own system. If you notice a particular pattern for the markets oscillations, you can always create your own strategy as opposed to following someone else s.

It should be kept in mind however, that automated Forex trading systems are robots and there is no human intervention, so use them at your own risk. If you are still leaning towards trying this out, it is a good idea to start with a dummy or practice account until you are confident in what you are doing. Once you can see some positive results then you can consider actually investing your money. On a final note keep in mind that the cynics of the Forex world will tell you that is these automated Forex robots were so successful why is it that people are still losing money. Skeptical Forex traders say that if these automated Forex trading systems are so successful, there wouldn’t be any losers at all. So keep that in mind when making your decision.

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