Here is a warning about automated forex trading systems. The underlying principles for using automated trading software may be flawed, especially right now. But let me first explain the idea behind these platforms.
First of all, automated forex trading takes the human component out of trading. All experienced traders know that a big part of trading successfully is managing your emotions. When you program your forex trading strategies into a software program to trade automatically for you, you take your emotions out of the equation.
This limits any hesitations in decision making, which may prove to be fatal in such a high pressure, fast paced environment. In addition, it keeps you from the follies of both greed and fear in trading.
Secondly, there are many technical indicators and forex trading signals that seems to work. Most of the preprogrammed scenarios in these platforms always have some kind of study that backs up it’s success rate and so forth. There have been some good reviews written about certain forex trading systems as well.
The warning is the fact that most of these systems use technical analysis as it’s primary mode of operation. There’s nothing wrong with that per se since you have to use some kind of technical analysis to trade. But it completely leaves out the fundamental components, like GPD reports, jobs reports and consumer price index news.
In any normal trading environment, that may not be such a big deal. But right now with this currency war going on between world governments and central banks, it’s almost ludicrous to ignore these fundamental indicators. The central banks’ interventions, government fiscal policies on capital inflows and foreign investment and other major policy shifts are a huge factor in what is moving the currency market right now. If you ignore them to only look at technical indicators, you will be sadly mistaken. So when you are using your automated forex trading system, remember to use your brains about what’s going on in the news.