Advantages and disadvantages of automated trading

An automatic system may be the solution for many traders who have seen many difficulties manual trading, which, as we know, requires a lot of dedication and hours on the screen, something that most people do not have today, by not to mention the patience for it.

Let's look at some of the advantages of adopting a system of automatic trading:

1. No need to have experience in trading, especially in the difficult world of Forex. A novice trader can search among the many automatic systems on the market, as well as social trading hubs where many teachers offer their automatic trading systems. The problem with this is that many of these systems or "masters" do not work in reality. You have to know how to separate the wheat from the chaff, but this is easier said than done.
2. If the trade has programming skills you can try to implement them designing many systems and logarithms. The limit is the imagination of the trader, then you can always try millions of different variables, both indicator and time or instrument. If we learn to program or we can even develop our own Expert Advisors (Expert Advisors), so fashionable in the world of Forex.
3. One of the main advantages is eliminate the problem posed by emotions in trading. Anyone who has tried to trading in any way be proven difficult to carry out trading plan once we add the mix of emotions and our anxieties. One thing is to design a system and apply another live. With automatic systems this uncertainty is removed. 

4. The problem of time, already named before. In the markets, the number of instruments is so broad and so many possibilities, which can not be glued to the screen for opportunities to give us our indicators all day. You may give those opportunities when we are away from home, either working or doing something. With automatic trading system that we negotiate when conditions are right, whether or not we are at home. With this, there is no need to leave our jobs to try.

5. Opportunity to choose different signals from different suppliers of automatic trading. Thing that can enable us to form our kind of fund or hedge fund, having several providers that can be considered "active".
6. By having more free time because the system handles make trading, we can focus on other more productive things, either designing other systems, such as improving the current, like anything else that can improve our finances or lives.

7. Make innumerable tests of our systems. This is obvious, once we have the chosen system or that have developed. We can apply that system and its variants at previous years and on different instruments if we want. The possibilities this gives us are enormous. However, we must remember that the backtesting sometimes does not match the actual market conditions, which we are here presents the problem of over-optimization. A system can win in "demo" or backtest "but not win" real ".
8. Have discipline. This is related to the point already mentioned emotions. To apply a trading system we need discipline and it is very difficult to get operating manually, because we will always be tempted to get out of the system when our "intuition" tells us. Sometimes you can work out if the operation is winning, but if we are not disciplined and the decision is wrong psychological effects are devastating.

But the automatic trading is not all advantages, but also has its problems and disadvantages. We have already seen some of the advantages they can turn into problems, because there are always different versions in every way we see things, and automatic trading is no exception to this.

One of the problems that usually automatic trading is that this needs to be monitored, because not always enough to simply leave the system in place and go to "sleep" for several days. many problems, such as you have connection problems, we want not negotiate when they get out the news as the NFP Forex, for example, etc. may occur.

Also, many systems require active management in which we should change some of the parameters based on

A key point in the analysis of automatic trading systems is the fact that we tend to over-optimize them, assuming a fairly benign conditions of trading, as if they were always constant, but this is not always the case, because in the long weeks that the market remains open incidents greatly affecting trading conditions, such as those named system failures, especially sudden changes in market conditions often occur. Let's take an example of the latter:

Suppose we do a backtest EURUSD going two years back in time and cost of assuming a spread of 1.5 pips for our study.

It may well be that this system gives us a 30% annual gain, but when applied to real market give us even losses.

This can happen because the system did not take into account changing conditions throughout the week, such as NFP or interest rate decisions of the EU or the US. So, it could happen that a winning trade in our backtest with the 1.5 spread would have given us a losing trade into reality with a spread which increased to 20 pips at the time of the announcement of the NFP. This also can occur in more examples, and night-trading, where there is less liquidity, or unexpected crisis.

In this way, we can make us an idea of ​​the difficulty that the backtest be entirely reliable. Therefore, it is best to have or find a system with a ratio of profitability in backtest above normal. Most often, you have to "remove" part of that performance when applied to normal conditions.

For example, a system that gave us 80% per year over a four-year backtest, might in reality we will give 20%. Therefore, there will always be to look for systems that behave out of the ordinary in "positive" sense in our backtests. 

evolving market conditions. From this we have already discussed above; It is that many of the systems performed well in the past usually show problems in the long run, changing market conditions; for example, a significant increase in volatility.

Automated Forex

Forex robots are programs or automated systems that have been designed by experts in the trade in the Foreign Exchange Market, better known as Forex.

Forex Robots have complex algorithms that allow them to make accurate mathematical calculations of the information obtained from the actual data from the Forex market. Forex Robots are able to analyze millions of data in less than a second. Mathematical calculations that these programs perform, trading signals are generated and these signals depend on the decisions to execute orders or out of the trade. So "experts" these automated forex systems can be very beneficial, not only for those who are starting in this trade, ie novice or beginners but also for intermediates and experts.

The Forex or foreign exchange market is the largest financial market and liquidity in the world, with a volume of exchange transactions of USD 3 trillion every day, ie more than the main stock markets together. This is the main reason why it is very attractive to many traders and they like to participate in.

The Forex is also one of the fastest ways to profit, so in addition to natural persons also banks, private companies and other institutions are also involved in this market. The main feature of this market especially for those who want to make money on, is that the Forex is the financial market of greater size and liquidity, so it is "virtually impossible" that is controlled by a person, institution or government.

To trade currencies on the Forex, you need to have a good training and education. You can learn by reading books Forex is the easiest way, there are also many professional courses available. You can also learn a lot of Forex robots or automated systems. This is true, automated trading programs are tools that support it and make trading easier for you and are also very useful to learn.

The Forex is a highly volatile market, the prices of currency pairs can be changed in seconds, so you

can say that it is unpredictable. Often compared to a game of chance. For this they play an important role in negotiating emotions. If you can not control your emotions and fears, you are not prepared for this market. "If you think you can, you can."

People who have difficulty managing their emotions can take advantage using Forex robots or automated systems.

Please note that Forex robots or automated trading systems can make you earn a lot of money, but can also lose money with them, should be aware that, especially if you let these systems work alone, unsupervised.

However we must also be careful with fraud, as many companies that market these robots are fraudulent.

The Expert Advisor, although profitable, must be properly configured and optimized according to the new market conditions. A novice Forex is simply not able to do so without enough experience.

Proper adjustment of the input parameters depending on the currency pair, time frame and conditions under which you are operating are very important. A Forex Expert Advisor (robot) should be able to run 100% by market. Apply it to different pairs will also require a new setting of the parameters, but will lead to higher profits.

The novice trader always looks more attractive set the Forex robot to operate all existing currency pairs on the platform, but this means that when you are trading many pairs, more optimization and adjustment will be necessary. And Forex newbies are not usually able to follow many currency pairs at a time. Experts recommend focusing on one or maximum two currency pairs at a time to gain a better understanding of how Forex trading works.

If you really decide to start your automated Forex trading - with the robot free or paid - would be better to try it first on a demo trading account. With a demo account is not real money is lost, but you can see how your Forex robot works. Although the execution of operations may vary with the actual accounts of your broker, the demo trading will give some basic tips on this topic.

Currency swap

on foreign currencies between two parties who agree to exchange elements (call the principal and / or interest payments) of a loan in one currency for equivalent elements of a loan equal in net present value in another currency. So, it is a type of derivative foreign currency. Currency swaps are used pair exploit comparative advantages.

Stfigures

A currency swap is an over the counter derivative, and is closely related to interest rate swaps. However, unlike interest rate swaps, currency swaps may include the exchange of principal.

There are three different ways in which currency swaps can exchange loans:

1.The simplest structure of a currency swap involves exchanging only the principal to the counterparty at the point of the specified future at the rate agreed now. An agreement of this type is developed similarly to a forward contract or a future mode.

2.Another structure for a currency swap can combine the exchange of loan principal, as explained above, with an interest rate swap. In this type of swap, interest cash flows are not "netted" before being paid to the counterparty (as you would in a vanilla interest rate swap) that are denominated in different currencies. As each party effectively borrows in the interest of the other, this type of swap is also known in English as a back-to-back loan.

3.Last but not least, you can swap only the payment of interest cash flows on loans of the same size and term. Again, this being a currency swap, the exchanged cash flows are denominated in different currencies so you are not netted. An example of this type of swap is the exchange of interest payments in dollars at a fixed rate against euro interest payments on variable rate. This type of swap is also known as cross-currency interest rate swap, or cross currenfigures swaps.

Unlike other similar figures

In English this type of swap is sometimes called cross currency swap or currency interest rate swap (CIRS) and must be differentiated from the so-called "FX Swap" or "Forex Swap". In addition, a currency swap must also be distinguished from swap liquidity of a central bank.

Errors when investing in Forex

Some errors when investing in forex or invest in other markets are very difficult to avoid if you have no prior knowledge about the market in which to invest.

In the following lines we will expose some of the most common investing in forex by novice traders or people who approach this market with erroneous expectations errors.

1. not give enough importance to training
One of the biggest mistakes novice traders is underestimating the difficulty of investing in the forex market.

You have to understand that in this market involved investors and financial institutions have in their templates with extremely trained professionals and that move millions in a single operation.

When you start investing real money you have to think that you are investing against them, and therefore must have training and market knowledge solid enough to not risk your capital recklessly.

2nd. Start investing with false expectations


Many of the people who start to invest in the currency market do it with false expectations.

In those expectations are ideas like that is not necessary prior knowledge to win, or you can live by trading with little capital thanks to the high leverage that allow different Forex brokers.

All these erroneous expectations and many more that have omitted to do too heavy item are to blame for many traders lose their capital during his first months as investors in this market.

3rd. Forex trading with excessive leverage
Forex leverage can agree that is a very useful and even indispensable tool. However, it must be said that its misuse could cause very heavy losses.

One of the arguments that encourage market entry on leveraged, is to think of the high profits will be achieved if the market moves in your favor, but often do not take into account the reverse option that the market moves against you.

We must be aware that however you can be sure of an analysis you've done, you can be wrong and one error if these over-leveraged would be devastating to your account.

4th. Do not use Stop Loss

The Forex market is known for its high volatility, and that's why we have to keep in mind that the use of Stop Loss is very necessary to limit losses as much as possible.


You can see yourself in the situation you open an operation and within seconds the market does not stop moving against you for some news for example. In such situations, have a Stop Loss order placed will prevent losses increase and increase and allow you to limit the risk that you take when operating in such a volatile market.

5th. not give enough importance to capital management

Almost all traders starting usually pay more attention to the money they want, want or expect to win, to maintain and not lose the capital to start.

You have to think that your capital is your best tool to make more money and therefore have to devote part of your efforts to learn how to manage it the right way.

6th. not stop change and change the trading system

This error traders make sound already investing in Forex carry a time, but not just get good results with the type of trading they do.

In this case traders change and change system hoping to find an indicator or a way of operating that never fails and you unlimited benefits.

We must avoid falling into this type of behavior and try to figure out what kind of trading you feel more comfortable and specialize in it.

7th.Indulging misleading advertising of some Forex brokers

This error is one of the most affecting investors who start with very little capital and little or no training.

Unfortunately many brokers, using unfair behavior with a potential client, do advertising campaigns implying that a solid formation to invest in Forex or you can live by trading with 1,000 euros is required.

We must avoid being carried away by this type of advertising message even avoid having any business relationship with brokers who use this type of advertising to get customers.

Many of the envelopes mistakes that we talked about earlier are committed by the inexperience of traders who are just starting.

It is true that it is very difficult to avoid them all because we are not aware of many of them until we make, but if we use common sense and devote enough effort to training, sure get avoid some of them.

How I can invest in the forex market??

Before seeing how you can invest in the forex market, we must make clear the challenge. Investing in this market is to assume an increased risk of capital loss, since competition exists and the difficulty of mastering the fundamentals of the forex market, make the investor will have to deal with losing streaks, continuous frustrations and situations of uncertainty that will make the doubts are always present, therefore, we must be clear what the advantages and disadvantages of the forex market.

These are the stages through which the trader must pass to be known as an investor and try to dominate its operations.

Training as a starting point

Before facing the market, the trader must be fully trained. To do this, you have to let laziness aside and try to read the best books and forex trading to learn the fundamental concepts of technical and fundamental analysis, as well as the experiences of other traders.

Understand how

As they progress through the stage of formation will arise doubt about the more complex aspects of the functioning of the market and what are the agents that compose, brokers, banks, etc ..., and what is the behavior of each.

This phase is crucial because, if we know how to behave in each of the actors in the market, we will be better prepared to deal with possible eventualities that may arise.
Find reliable sources of information
Keep in mind the important role played by central banks and the functioning of the economies of the countries that have greater presence given the importance of their currencies.

Keep in mind that the future of each currency is marked by the economic policies pursued by these institutions, as both a monetary injection, a rise or fall in the interest rate or a correction in employment or the expected growth, can make economic policies are changed and this will mark the exchange rate of the currency against other currencies.

Owning the necessary equipment

Depending on the type of trading you make will need more or less flexibility when performing the operations, but you should still from at least a minimum equipment that allows you to not take unnecessary risks.

A trader should have a good internet connection that is fast and reliable, a computer that meets the requirements for guarantees to use the trading platform of choice (JForex, metatrader, ... etc) and if you experience outages could usually be must purchase a UPS (uninterruptible power supply) to avoid losses because they can not cut an operation on time.

Choosing the right Broker
This is an important decision, choosing the right broker who will make you avoid unnecessary risks and problems. Some of the factors you need to consider are: where is regulated broker (which institution is supervised), if you have support in your language, what type of broker is an ECN, Market Maker and if it is well suited to the way you operate or what trading platform offers: NinjaTrader, Metatrader, JForex or another.

Throw many hours a demo
Before deciding to trade in real time and risk your money you must test your system, and it comes in handy demo accounts offered by most brokers. Try everything you need before risking your capital and not be put off by impatience or desire to enter operations in real.

Open a real account
When you already know the broker you want to work, you can begin the process of opening the real account. When opening the account your broker will ask a series of documents to verify your identity and to prevent money laundering.

After opening you must enter the funds that you will make your operations. Remember the risk to your principal these investments and keep that in mind when deciding how much to invest.

Adaptation phase
Note that to start trading real pass through an adjustment phase as raisins operate demo play money to make risky operations in real part of your funds and, therefore, appear questions that were not present in the demo. Little by little you will adjust to this new situation.

Analyze daily
In addition to strictly carry your trading system you should analyze all transactions you make to go debugging errors that have not previously detected in your system.

To carry an orderly analysis of your operations you should keep a diary of trading for records all relevant data of your operations and also attach a picture of the operation to visualize more clearly how the market was at the time.

How to invest in Forex and Make Money Safely??

How to invest in the Forex market ?, undertaken in the business of foreign exchange is relatively easy, the difficult thing is to succeed. To that end I bring you some tips so you can do it the safest way if you really want to make money, so you make of safely.

Important Tips to invest in Forex and Earn money
Investing in the Forex market can be a good way to make money. Pera truth is that it is not so easy to take on the financial markets. Must learn and implement good strategies to penetrate the safest way, today we leave some tips.

It is true that for many the forex market is very profitable, achieve win good money. However, like everything in stock issues, it has an index of risk to be able to assess. It is essential to know the basics if you really want to make money in forex, but remember that there is always the possibility of losing it.

You must not forget that the Forex is as volatile market as profitable as, as the value of currencies is in constant motion. You must be aware of this and be prepared for such volatividad move easily and not get distracted by emotions of cold decisions to will earn money instead of losing it.

In other words, if you opt for this type of investment will be a good decision. But if you prepare and analyze all possible variables, it will become a safer strategy that can take you to increase your capital. It is clear that knowing the basics to really gain by investing in the currency market.

Basic strategies that ensure high profitability in Forex Market

1- Basics to invest safely in forex (of course after learning how is the market) is to be a good observer because it allows you to study the market's advance and setbacks, to make a reasonable forecast in the unpredictable that is the foreign exchange market.

2- Accept that invest in highly profitable Forex involves reasonable time losses, but must be taken not placed in dangerous positions they may seem very profitable.

3- No complicated and buy or sell following the clear trends. we must not forget that a number of negative or positive results could be a coincidence. When they are repeated in a week, it is a marker. When they are exceeding this week,becoming a trend
In addition to these strategies, there is a series of actions that will be key:
A) Something that is not easy to avoid when there is sufficient experience: let not drag for good temporary results. Remember this and do not take emotional decisions, but rather rational.

B) Always keep in mind the volatividad of market: do not invest capital in one product. always remember that in the stock any results this assumed equal future results.

C) Especially for a novice in the forex market will be very important not to invest large amounts of capital, and never borrow for very profitable it is.

D) To invest in the forex market profitably and as safe as possible need to take advice from a broker or trader accredited. There are countless specialized international web and offers Forex brokers.
Tips for newcomers to the Forex Market
Thanks to leverage the currency market or Forex (Foreign Exchange) has come to the small investor and has become popular as an option for investment. This market operates 24 hours a day and moves large amounts of money, in fact, is the most active and liquid market there today.

As in any investment will be at risk and we have to evaluate them before you start investing. If you decide to take the plunge and dive deeper into the world of forex trading, here are a few tips before you start to invest.

The Basics of Foreign Exchange
This is very simple, but always keep in mind. Many people skip the basics and want to learn to operate directly in the currency market. This is a fatal error and that we can get quite expensive. If you're a newbie in Forex, the first thing we have to do is to learn and understand the basics.

The experience makes you Earn Money

If you expect to get rich overnight, you're wrong and you better not miss before you start and look for alternatives. Do not be naive, the experience in the world of trading is one of the most important factors. The more we operate in the market, the more efficient we become.

With the experience we get to see things that are not novices. The way to become a good trader is long, so you must be willing to learn and gain experience until you become one consistently profitable trader.

Beware the "Expert" (the famous Gurus)
The problem of the financial markets is a rookie that curdles a good week thought to be an "expert" or guru. Other "expert" that we can find on the Internet are those who beg us to buy your book.

These people may have failed as traders and now want to make money teaching other traders fail. These self-proclaimed experts tend to:

1- Release generic information that today does not work.

2- They say they are traders with lots of money and still trying by all means to put you his book.

3- claim to have invested 1000 euros per month and got 1 million.

4- skillfully use mathematics to look more professional.

Before blindly believe in one of these "experts" reflect and think things through. If someone had a magic wand with which to make money easily, I do not say, but other operators do the same and lose its advantage.

What seek such "gurus" are people who fall into the trap of buying his book (in which usually only found basic things, impractical and does not currently serve).

Make your own analysis

Further to the above, blindly following others will make us blind. Our goal is to become a successful trader rather than someone who copy or follow strategies of others. What do others helps us to analyze and reflect on it.

What we learn we can incorporate into our analysis in order to become a consistent long term trader. Simply copy others will not make us better traders, we will be good but not negotiating copying.

As an operator we have to develop a strategy and learn to analyze the market. Being able to make our own market analysis will take us closer to being a professional trader. Make your own analysis allows us:

- Be self-sufficient

- Learn to trade currencies

The myth of the demo accounts

For example, if we want to be professional footballers, we will not buy a football game to start our training. The same happens with the demo accounts that we provide most platforms that people use in hopes of becoming a successful Forex trader.

Demo accounts do not work for 2 reasons:
A) We offer a false confidence and make us to catch bad habits.

B) These accounts do not work like a real account in terms of speed of execution and other relevant factors.

On the other hand demo accounts they have the advantage of allowing us to know the basics about the operation in the Forex market. When you try to gain experience, we only operate in a real account.

We can start with little money and taking as we go fluidity and consistency gradually increasing.

Limited losses

It is the most important rule to follow is mandatory. You must be willing to assume some level of loss and put in there a maximum limit of money we lose. Thus if prices fall below that level alone we will have lost what we were willing to lose.

We have to play with these limits and tightening at the bottom no price too because small fluctuations may cause premature closure of our position.

We must also operate with a clear head. For example if we take a run of several days at a loss, it is best to rest a few days and come back fresh. The losing streak can lead to large losses and to make decisions that at another time had not taken.

Be prepared for the ups and downs

Each strategy has its ups and downs. There is no system that is 100% profitable throughout the year. So we must be prepared for fluctuations. As we said earlier, success is measured in the long run.

The problem is that many novice test strategy and if it does not work to them during the first week set aside and a new test. It is advisable to see how the strategy behaves in the medium / long term.

Keep it simple

There is no reason to look for a very complex and convoluted strategy. The best strategies are perhaps the simplest, which involved fewer elements when making decisions.

For most indicators, graphs, ratios, oscillators, etc. you use will not have better results, even more likely that your results are worse long term as many indicators can give you conflicting signals.
Specialize in a single currency pair
Following this, simple works. Needless to manage and all currency pairs and in this way we may escape interesting things. Focus on one currency pair allows us to concentrate all our efforts to understand how their trading moves.

If we try to trade with 5 pairs at the same time, learn to negotiate it becomes very difficult. We will have to learn the characteristics of each separate currency pair as each pair is unique. Each currency pair:

1- reacts differently to the news

2- move at different speeds

3- suffer different movements as slots

4- You have to handle in different ways as it remains an open position.

5- If you are new, start with a single pair. Once you are consistent with one, you can start to learn the characteristics of another.

Choose one installment
In the same way as above, it is always advisable to start trading using the same time horizon. This has several benefits:

A) It allows us to focus on learning one time, therefore, we eliminate the confusion that can lead us to operate at multiple time horizons.

B) In the FX market we just look at a single graph, thus improving the efficiency and quality of our analysis.

C) We avoid conflicting signals that can occur if you use different time horizons.

Remember that all this is to make everything easier. Once you go through experience can start your analysis more complicated.

simple graphics
Most novice accumulate as many indicators as possible within a price chart. They feel that the more indicators will fare better use.

The reality is that a larger number of indicators, the greater the degree of confusion as many are contradictory and give conflicting signals. Besides graphics become more difficult to read and have no clear signals.


I hope this information will be useful if you decide to invest in the currency market (forex market). Discuss and leave your advice for entrepreneurs looking to make money and want good information on how to invest in Forex.

What is the trading??

To answer questions ala what is trading ?, let's get into the skin of an investor or a person seeking a return.

Forex trading 4.0

The meaning of trading is simply the act of buying or selling an asset, and then selling or repurchasing with the intention of making a profit on that transaction.

We can do trading in any financial asset that fluctuate, such as: stocks, futures, CFDs, Forex and other financial assets.

Keep in mind that, as we have said before, you can do trading in any financial asset that fluctuate in value, but we have to understand that there are ways to do that we are going to offer different types of collateral.

1. Do it on financial assets traded like stocks plus we offer a guarantee because there will be a regulatory body that oversees the asset and its price.

2. As in the Forex market, the supervisory being an over the counter market entities have no ability to control fluctuations in the exchange rate, but to oversee the agents participating in the market and are under its jurisdiction, such as the broker through which the traders perform the operations, so it is very important to be well informed to choose the best broker.

Types of trading

At the time of trading we can perceive different characteristics. For example, while maintaining an open trade and will allow us to classify the four most widespread forms of trading.

Scalping: scalping traders who do hold open trades in seconds or minutes, usually perform several operations a day with the aim of achieving small profits in each.

Such traders often exploit the most volatile pairs, since those are the situations that allow you to make more profits.

Day trading: the time slot using this type of traders, as its name suggests, is the daily. The Day traders typically open and close their positions on the same day, leaving no order within the market between day and day.

Swing trading: traders who do this kind of trading maintain their open positions for days or weeks, looking for routes where major traders above quote, and focusing on more pairs of currency trend.

Position trading: this type of investor you could classify as an investor in medium and long term, able to hold open positions for months or even years. In these cases, the investor tries to detect long-term trends in the value of the couple.

Forex trading examples

Imagine that we want to invest and, as shown in the above chart, the EUR / USD on November 19, 2014 was approximately 1.2600.

If we think the exchange rate will drop 1.26, which will be placed a sell order with the intention to repurchase at the time to lower the price of par.

As long as we maintain the open trade could describe our trading into one of the four ways described above.

Imagine that we closed our position on December 5, 2014, when the price is 1.2250, in this case we have maintained the order for about two weeks and could qualify as swing traders, as this type of trading positions remain for days or weeks.