Automatic trading or algorithmic trading was developed in the 1980s This is a trading type using computational tools to the entry of orders by leaving an algorithm define when the order is opened and closed his price and volume. The operation takes place without the intervention of a natural person. This practice was in its infancy, only used by banks and financial companies. It is now also available to traders at home.
A properly applied strategy
Automatic trading has different reasons to be for a "hedge fund" for an evening trader. A "hedge fund" uses the automatic trading to calculate complicated strategies that could not be used without computer assistance. These strategies are used to limit the risks to the entire portfolio, this in contrast to the home trader who uses individually to speculate on indices or currencies.
As part of the activity of an independent trader, automated trading serves to define the conditions for placing orders, the size of orders to pass and closing conditions of open orders. More generally, it can be certain that the strategy is properly implemented without having to spend many hours in front of it.Policies can be multiple and should be tested before being applied.
The limits of automation
This method also knows some disadvantages that it is good to keep in mind. If the system works on the basis of defined conditions, stock markets are constantly changing. The system does not always work provides the necessary foundation. The automatic system must be evaluated in a manner appropriate to perform well, which is not necessarily given because some rules are very difficult to code.
An immense source of strategies and indicators
One platform that can be used for automatic trading, and being proposed by many brokers, is called MetaTrader. Its programming language is accessible and that version 4 (MT4) is widely used in fact a great source of information, strategies and indacteurs.
Among borkers offering this platform include HotForex or FXOpen. The HotForex MT4 platform offers a host of tools. Nearly a dozen blocks of time for each of the financial instruments are available. This allows in-depth analysis of the dynamics of the course. It offers fifty indicators and tools that enable a simplified analysis of trends and patterns, for example.
The broker FXCM also proposes to trade according to the automatic model with Strategy Trader. This free option to make strategic investments in the Forex while ensuring not to apply the wrong strategy.