The forex market is still the largest market of the world which is even bigger than all the stock markets. Forex refers to the business of forex exchange currency. In the forex market, forex traders estimate the value of the currency and then place their trades in the bulk quantities. The forex market remains open for the whole day, and it is regarded as highly leveraged and liquid. Because of these features, it can be used for the automated trading.
Trading involves buying and selling of financial instruments across any market. Instruments include options, stocks, bonds, and other entities. Majority of the traders places their trades by themselves. This happens when they feel this is the right time according to their strategies. Computer algorithms are used in placing the automated trading. There is no human connection involved in this process. Human is only involved when the algorithms are made. Once the human job is finished, computer takes up all the next processes, which involve buying and selling.
The currency itself doesn’t have any intrinsic value. Its value only appears when it is compared to other currencies. The U.S. dollar may be having a higher value when compared with Canadian dollar, but on the other hand, it is losing its value against the Euro. In the forex market, all the trading takes place in the form of “currency pairs.” This includes one base currency, and the other one is used for the valuation of the pair. The exchange rate between the two currencies is equal to the purchase price.
There are always minute changes in the exchange rates. With the help of leverage, a trader can purchase some other currency pairs within his budget. Alone in the U.S, the leverage can be up to 100 times based on the exchange rate. This way, an account holder having just $10,000 will be able to grab around one million dollar of currency pairs.
The advantage of automated forex trading is the skill to capitalize on the opportunities that missed up in the normal days due to sleep time. Equity products like stock usually work on the normal business hours, as this is the time when the stock market remains open. Since the forex has no fixed time, hence the 24-hour market is very important for the traders.
Automated trading can still be very helpful even if the trader has free time. There are often physiological problems attached with the automated trading which prevents the trader from taking various chances. One must not forget that there is a high amount of stress involved in the trading profession, but automated trading is designed to reduce such issues. Along with that, with the help of automated trading, programmers and other personalities take part in the active trading. This usually happens when there are out of work and can easily show their presence. If a trader can learn to control his emotions, the success will kiss his feat.