Forex Algorithmic Trading

Forex Algorithmic Trading | FX Trading Platform

Forex Algorithmic Trading Broker Comparison Table
Online BrokerMinimum DepositForex Algorithmic Trading Platforms
$200MT4, MT5, cTrader
$50MT4
$200MT4
$100MT4, JForex
$200MT4, MT5, cTrader
$50MT4
$5MT4, MT5
$100MT4
$100MT4, MT5
$200MT4, MT5
NoneMT4
$100MT4, MT5
$100MT4
$5MT4, MT5

Forex Algorithmic Trading

Forex algorithmic trading is trading currency pairs using automated trading strategies or algorithms executed by computer programs. To do so, the trader needs an account at a broker which offers Forex trading and a platform or platforms which support automated trading. Such platforms include MT4, MT5, cTrader and JForex. All these platform allow the trader to run automated trading strategies (systems) or algorithms (also known as robots). The broker may also allow the trader to plug directly into their servers via the trader's own front end, using a FIX API.

Do automated trading systems work ?

Automated trading is a way to run trading strategies in behalf of the trader. It should not be assumed that any system will work, even if it has been backtested on past market data and generated successful results. Automated trading can be used when it would be impractical for the trader to trade, for example running a strategy which applies an indicator rapidly and repeatedly. Some things computers are better at than humans. The problem is that human traders can exercise discretion and judgement, in a way computer programs cannot. Thus a computer program will tirelessly execute a strategy 24/7, where a human trader might tire or make mistakes or be unable to spend time at the computer. However the capacity of the human trader to reflect on the market and adjust their trading is missing, though it is possible to tweak a strategy and try to increase its performance between runs.

Just because a system has worked in the past does not mean it will work in the future and how it performed may not repeat itself in the future. A feature of trading systems is drawdown, where the trading system incurs losses. It may work out in the end, but it also may not, even if adjusted. One way to consider this is to think about how a human trader trades. They may apply a strategy and find it works sometimes and does not work at other times. They may adjust the strategy to market conditions and it may work, but it also may not work either.

So a system may be a more practical choice for some kinds of trading, but because it is more practical it cannot be assumed that it will work, and the power of the human to exercise discretion as the trade develops is missing. The advantage is that discretion itself can become problematic, as the trader makes human errors in exercising it. These errors can be seen emerging from trying essentially to trade like a computer program. In these cases there can be an argument for using trading system, with the caveat that they may not work, any more than any trading strategy, discretionary or automated, will work.

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