By Matthew Cheung
By Matthew Cheung

FX strategy automation for retail traders

Forex robots, Expert Advisors and Artificial Intelligence, all of these words are probably familiar right now to retail Forex traders. They may be thinking, “I don’t need any of that to trade the financial markets, all I need to do is click a button!”. Well, the professionals are saying otherwise, hedge funds such as Renaissance Technologies and Bridgewater are already using Artificial Intelligence and computer modelling with great success in trading. Why do these firms even bother using automated systems?

First Published: e-Forex Magazine 86 / Automated FX Trading / May 2019

The main purpose of automation is to reduce costs and labour. In the trading world it’s also about generating comprehensive trade ideas. Retail traders have yet to apply automation due to a couple reasons, inadequate education and misunderstanding the applicability. Most of these traders do not fully comprehend the concepts involved in Forex, including factors such as: computational processes, econometrics and financial engineering. However, this is what the professionals understand and apply daily. This is the retail trader knowledge gap. Barriers to entry such as false information and conflict of interests within the market have disabled over 80% of retail traders from being successful. The secrecy of the industry itself makes it very difficult to decipher what automated processes are good or bad. Proprietary systems that have outstanding performance are not made publicly available, generating a technological gap between institutions and retail traders. The stand-alone trader must now figure out...continued

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