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Disadvantages of automated forex trading
Written by: PaxForex analytics dept - Monday, 29 July 2013 0 comments
Automated forex trading systems are computer programs (also known as forex robots) which take and execute trading decisions of trading strategies or trading rules coded or designed into it. You can use automated trading systems in advanced platforms of forex brokers. There will be a trading strategy consisting of trading rules designed into an automated trading system. Automated trading systems will find trading signals according to the trading strategy given in it and then will execute trading signals automatically.
It can be a great idea to turn on the computer and leave for the day, but automated trading systems do require monitoring. This is due do the potential for mechanical failures such as connectivity issues, power losses or computer crashes and to system quirks. It is possible for an automated trading system to experience anomalies that could result in errant orders, missing orders or duplicate orders
Most advanced automated trading systems are expensive to buy or present itself as a package with a few prerequisites to respect. The operator must invest in the creation
of the commercial infrastructure that includes one or more internet computer high-speed backup and other power systems. Also set the rules of rights and using the correct settings can be a little difficult.
It is very difficult to get an automated trading system to read and decipher fundamental data, such as economic and political events. Hopefully the result of the event is impeded in the price action and then the automated trading system can read it. A sudden extreme event that quickly reverses the market direction can cause an automated trading system to get stopped out, and/or enter too late in the new direction.
It is a sad fact that 95% of automated trading systems end up failing; either losing a bunch or just barely staying alive. Trading with automated trading systems is not going to make you rich and more likely they will make you poor if you trade them in real accounts. It is estimated that 95% or more of the automated trading system will turn out to be unprofitable over time. That is an unfortunate fact.