In the world of trading, technology is advancing at a rapid pace, and even forex trading brokers are having to swiftly adapt to the changing environment in which they operate.

Now automated computer programs exist, which can help make trading decisions instantaneously, supposedly replacing much of the decision making, which the trader is required to make. Here is some further information.

Technical Analysis

Automated forex trading systems work by analysing market trends and making decisions about which could be profitable to the trader. This is essentially automated technical analysis, and forms part of a trading system which does not require any input from the user of the program.

These automated systems remove the need to extensively study forex charts and graphs, and save a lot of time as a result. Some would argue, however, that predicting market trends by looking at previous trends can never be entirely accurate, and technical analysis methods differ greatly from trader to trader.

Removes Emotion

One of the greatest benefits which automated systems provide is the lack of emotion in their decision making, something which often hampers human traders who can be impulsive and illogical. This means that they simply look at the facts and make logical decisions based on methods they have been ‘taught’ to apply.

It also means that trading is consistent and strategic, and follows a structured pattern. Those traders who have discovered a successful strategy based on technical analysis can simply program this in to their software and it could prove to be profitable.

Predicting Unpredictability?

All global markets are unpredictable by nature, and it is arguably impossible for any machine to accurately predict the various twists and turns which happen on a daily basis in the forex market. As one of the largest and most liquid markets in the world, forex is particularly volatile, and is influenced by a number of external factors (like political events).

Automation cannot use any form of fundamental analysis for trading, which is also an incredibly important when making decisions as a trader. Its effectiveness, therefore, is limited in this sense, as it can only make decisions based on past market trends rather than upcoming influential events.

Automation could be a good or bad thing in trading forex depending on how it is used. It can never guarantee a profit and so is not a game changer, but it can save the time and effort it takes to apply technical analysis to trading strategy.