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How has automation revolutionized Forex trading

How has automated trading impacted the forex markets, and what has this meant for brokerage platforms? Let’s find out

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There’s no doubt that forex trading has undergone a significant evolution through the years, from the so-called “gold standard” and Bretton Woods System to the free-floating exchange rates and $6.6 trillion marketplace that exists today.

In the digital age, we’ve also seen automation alter the marketplace almost beyond all recognition, with this methodology leveraging algorithms and programs to execute trades based on a set of predetermined rules.

But how has automated trading impacted the forex markets, and what has this meant for brokerage platforms? Let’s find out. 

How Does Automation Work in Forex?

Automated trading systems are often described as forex robots, which are essentially specialised pieces of software that have been developed using mathematical algorithms and key technical indicators

The predetermined and programmable signals used within help users to determine when they should buy or sell a specific currency pairing, while they’re primarily utilized to minimize the risk posed by human emotion while increasing the speed and efficiency with which orders can be executed.

In terms of core methodology, forex robots can either be programmed to deliver signals directly to traders or act upon these independently in real-time.

How you use such robots will therefore depend on your outlook and experience as a trader, with knowledgeable and seasoned operators more likely to have signals delivered to them as they look to make more informed decisions.

What Does This Mean for Forex Brokerages?

While automation is often considered primarily from the perspective of individual traders, this evolution has also impacted brokerage sites in the UK and similarly developed economies.

More specifically, brokerages have embraced automation as a way of being competitive and attracting global customers, following in the footsteps of market-leading institutions such as JP Morgan.

Make no mistake; traders are increasingly likely to prioritize brokerage sites and platforms that offer access to forex robots, with this is a key consideration on a par with selecting FCA-approved operators.

This is even true amongst inexperienced investors, who can leverage demo accounts to experiment with automated trading strategies in a simulated and real-time marketplace without risking their hard-earned cash. 

Additionally, automation has dramatically reduced the need for dealing desks, driving significant reductions in cost and improvements in efficiency across the board. 

The Last Word

OK, we hear you ask, but what does the future hold for investors and the use of automated trading strategies?

Undoubtedly, mobile devices and technologies have played a significant part in the digital transformation of the forex trading platform, with the smartphone offering a relevant case in point.

There’s also a strong correlation between the rise of automated trading and the use of dedicated smartphone apps, with the latter empowering real-time orders and enabling investors to enact their automated trades in just a couple of clicks from anywhere in the world.

This is especially relevant when you have trading signals delivered directly to your devices, as you can check, analyze and act on these within a matter of moments when using a smartphone.

Have any thoughts on this? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.

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