Have you ever wondered why the term automated trading is commonly used in the context of forex market out of all the other markets? The simple answer is that forex market is spontaneous and continuous which makes it best suited for automated trading. Trading in equities, futures or derivates is a totally different process. They all have less standardization and are more complex, slow, and involve erratic proceedings and duration per trade. The average size of trade in all these markets is considerably less in comparison to forex, therefore, trading in these markets can be well done manually and there is minimum requirement of automated services.
Automation works best for tasks which require less human analysis and cognition-based adaptability but more calculative accuracy and continuous monitoring. Man cannot beat machines when it comes to diligence and accuracy. With the speed of technology combined with advanced programming that replaces human analytical skills and decision making ability, we get a high functioning automated device with great performance. All these features are best fit for forex trading which is a single-commodity market.
Foreign exchange transactions among businesses and banks of different countries are constantly undertaken all the time. However, the market is open for trading only on 5 days, from Monday to Friday, but the highlight of forex is that it operates round the clock. While other markets of the world has fixed opening and closing times and can be traded in for only 5 to 6 hours a day, forex market is open for trading 24 hours a day.
Trading on forex is significantly influenced by the trade timings in other financial markets of the world. US market or US currency is the major player in forex. European market is next in line along with Asian and Australian markets. Each of these markets during its trading hours adds to the volume of forex trade as each and every transaction undertaken in these markets influences the demand for money. During the market timings from 8 am to 4 pm there is high level of financial activity which causes higher demand for liquidity and money which influences the currency prices. With high levels of market activity, huge finances change hands at national and international levels which cause the exchange rates to move rapidly giving more opportunities for a trader to tap profitable deals.
Speaking in this context, the peak times in forex fall when two different market timings overlap each other. Hence monitoring the forex markets during these times is most essential in order to enter profitable positions. Automating your operations will help you follow these time zones efficiently while you can go about your normal office or business routines. You can feed in all the necessary parameters like timings and price levels for entering a deal, number of positions to be held, currency pairs, required pip spread, and exiting point. Once you set the required profit and loss limits you can forget about your trading for the rest of the day.
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