Australia’s best forex brokers are using forex robots more and more every year to manage the massive amounts of trading that most traders have grown accustomed to.
It isn’t just part of a fad but rather a change in the industry. Before, it was used mainly by significant corporations or investment firms where you could lose large sums of money if something goes wrong with their automated processes.
Still, now more small businesses are taking advantage of the power of technology to reduce risk while increasing profit potential.
Automatic analysis on international markets
They allow automatic analysis of international markets based on various factors, including time zone differences and economic shifts that may not otherwise be seen in late-day US forex trading in the morning in Asia. Some “pattern” recognition software that can look for specific types of price swings in a given currency pair or set of pairs can also play a role.
It is mainly due to recent advances in computer technology and its application in forex trading.
However, many brokers still limit their usage since it’s not yet totally reliable when used by amateurs who don’t know how to use these tools properly.
The most common type of robot is called a “scalper”, which looks at small minute changes in price over short periods, sometimes as little as one minute. That may sound like nothing but multiply with enough traders using scalping robots with different algorithms.
You have vast amounts of money changing hands every minute on the hour going into and coming out of trades. It can significantly impact brokers and individual traders because scalping robots look for those tiny minor changes in price that happen all the time and place buy/sell orders based on how they expect prices to change next.
In addition, some brokers are getting into high-frequency trading, which is placing over 100 trades per minute, 24 hours a day, seven days a week. These HFT transactions typically last less than a second each.
Even at only 10% of the actual trading volume, it has an enormous impact on brokers since they make their money off the spread between buying and selling price rather than from commissions charged directly by the forex Markets.
Forex robots allow these trades to happen automatically based on preset algorithms that look for specific price patterns or interactions. It is now possible for average traders to use these tools as well. Still, it’s important to remember that this type of trading differs from many individual investors’ buy and hold strategies.
So, consider the advice given here before deciding which path you will take in forex trading with robots.
Experienced vs inexperienced traders
Let’s imagine you are a broker in Australia with two clients. One is an experienced trader who makes decisions based on technical analysis; the other is inexperienced and uses fundamental analysis.
The experienced client trades off-market data that he receives from you, while the new trader has signed up for your ‘AutoTrade’ service; this means that every day your robot places all of his orders automatically on your behalf.
What would happen if both traders had identical starting capital?
After one year, the results would be vastly different, but it begs the question, why? An experienced trader can use complex forms of analysis to predict short term price movements; they might also have exposure to news feeds that could provide information on daily events affecting currency pairs.
The experienced trader would not use an auto-trading service mainly because many brokers take the bulk of the traders’ profits. Also, if the client trades too often, he may breach a contract with you – brokers have different rules regarding the frequency of trading. For example, some require 24 hours before an order can be placed again after being filled or cancelled.
Check out the five common traits of profitable traders.