What Is Forex Trading Software?

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Forex trading software comes in a variety of forms and performs a wide range of functions.

Forex trading platform software – This is perhaps the most common type of Forex software and it is readily available from most all online Forex brokers. Forex trading platforms can be either web-based or can reside on the trader’s computer to interface with the Forex broker’s data and order entry system. These days platforms are quite sophisticated and have the ability to display a wide variety of Forex charts and indicators. Forex platforms allow traders to place orders to enter and exit trades with varying levels of sophistication.

Forex trading platform software not only allows traders to place their trades in real time, but also allows them to track their trades in real time. This is particularly convenient as you can see your current total account value (equity) fluctuate with the markets price movement.

Forex technical analysis software – Today’s trading platform software is quite sophisticated and can allow traders to do all types of analysis, especially those that have a variety of built-in technical indicators. There is also another class of trading software that is designed specifically for the testing and evaluation of Forex trading systems. It allows a trader to test out their trading ideas on historical market data to see if those trading ideas would have been profitable.

Although anyone can purchase this type of software and begin to use it is really best when in the hands of someone who has experience in the development of trading systems. You may have heard some experienced traders say, “yes, it is easy to develop a trading system…but it is much more difficult to develop a trading system that actually works”.

Forex trading system software – This type of software has a built-in trading system is specifically designed to give the trader Forex trading signals. These signals are essentially instructions which tell the trader exactly which actions to take and when to take those actions.

Automated Forex trading software – Automated trading software can make trading decisions using a built-in Forex trading system. It can also place trades with the trader’s Forex broker without the intervention of the trader. This type of trading is grown tremendously in popularity these days and the prospect of making hands-free profits appeals to many new traders. This type of software also has another name and that is a, “Forex expert advisor”. You may also see it referred to as a, “Forex robot”, no doubt because it performs its tasks automatically and without human intervention in a mechanical fashion.

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Turn $1,000 Into $35,000 Without Risk – Really?

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Believe it or not that is actually the title of an e-mail I received trying to sell me yet another Forex trading robot. Let me ask you a quick question, if you received such an e-mail would you believe it?

Okay, let’s just say we want to give the sender of this e-mail the benefit of the doubt and consider the possibility that what they are saying is true. Turning $1000 into $35,000 is no small feat by any stretch of the imagination. I would think anyone would be proud to make 35 times their initial investment. This is amazing, but certainly not impossible, especially over the long term.

What was interesting about the title is that it states, “turn $1000 into $35,000” as if this is something that the robot will do again at some point in time in the future. I’m going on a limb here and imagine that the results are past results. One thing we all have to realize about past performance results is that they are in the past. This is important to understand because market conditions vary from year to year. I’m only mentioning that because when market conditions vary from year to year the returns on your investment will do the same. I know it would be less sensational, but it would have been more accurate to state, “this Forex robot turned $1000 into $35,000” (assuming that the statement is actually true).

In reality, it really isn’t the first part of the statement, “turn thousand dollars into $35,000 without risk” that disturbs me. It’s the last two words of the statement that are particularly disturbing…”Without Risk”. Merriam-Webster describes risk as, “possibility of loss or injury”. So based upon the definition of risk, the title the e-mail soliciting the Forex trading robot is attempting to tell us that there is no possibility of loss.

If you come as no surprise to you that I find that statement, “without risk” to the ridiculous when used in relation to anything in the investment or trading world. Unfortunately, there are many beginners who may read such an e-mail title and be drawn in by the words, “without risk”. I mean, really, in today’s economic environment who wouldn’t want to trade or invest without risk? Of course, you and I know that such statements are completely misleading. So to set the record straight for any would-be traders who might even remotely entertain the possibility that they can trade or invest without risk I would like to make the following statement: “There is no such thing as trading or investing without risk”.

So what should you do when you see a Forex trading product that is touting that you can trade it without risk? Simple, avoid it. I understand this may be difficult for some because it may be exactly what they want to hear. Simply keep in mind that no legitimate offering is going to tell you or for that matter even imply that you can trade Forex without risk.

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Forex Robot Tips — How to Tell If a Forex Robot Is the Real Deal

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Recently, the increase in the creation and utilization of Forex robots has caused great excitement in the Forex market. Forex robots, software that not only makes trading decisions, but also automatically places trades for a trader, are being hailed as the next phase for Forex trading. Many users see it as the ultimate in hands free Forex trading.

This new increase in the popularity of Forex robots has brought changes to the Forex market, causing an influx of new commericaly available products. Although the expansion of products in the marketplace has given consumers variety, it has also made it hard to to weed out quality products from those that are not. The following tips will help consumers successfully navigate the market for Forex robots.

Ignore the Testimonials: It is always necessary to be careful of third party opinions, but it is particularly important when making a purchase in the Forex robot market. Many of the testimonials are made by those who have had their product for a short period of time, so they cannot offer you a realistic view of how the Forex robot will work in the long term. Testimonials can also distract a shopper from the quality of the product by praising unrelated aspects such as customer service or nice packaging.

Does it sound to good to be true? : If it sounds too good to be true, then there is a good chance it is. Get rich schemes are always tempting for customers, and it will be necessary to avoid any product the looks like it will reward to well for too little effort.

Track record: Showing a customer a great trading track record is way many companies target potential would-be Forex traders. However, it is important to look carefully at the length of the track record. Many Forex robots can be successful for the initial few months, but fair perform poorly in the long run. For short-term trading systems there should be at least one year of data and for long-term trading systems there should at least five years of data. Making a decision based of less data then this is the same as choosing without any data at all.

Working Capital Involved: The Forex robot should provide the amount of money necessary to trade effectively. It should not be up to the customer to guess.

Percentage of Winning Trades: This evaluation measurement is frequently misunderstood. Many users assume they must have a have a high percentage of winning trades in order to have a profitable Forex strategy, however this is not the case. In fact, often Forex strategies advertising percentages between 95% and 100% are set that way to lure those with limited experience in Forex trading that don’t understand that such a strategy would be unsustainable.

These helpful tip will allow you to successfully navigate the market for Forex robots. Although it is tempting to jump right into the trading game, it is equally important to take time with the evaluation process and choose the Forex robot that is right for you.

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3 Disadvantages of Using a Forex Robots for Automated Trading

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Even though automated trading using Forex robots has become extremely popular, using them still has certain disadvantages. Let’s explore some of those disadvantages in further detail.

The logic is hidden — Having hidden logic is a definite disadvantage. A trading system which has hidden logic is known as a “black box” system. This simply means that the expert advisor takes in real time Forex data, processes the information using its internal formulas, generates a signal and then trades that signal.

The biggest challenge when using a black box system is that you don’t know if it is working as it should or not. What we mean by that is you can’t tell if it is doing what it is supposed to do if the logic of the system is hidden. What can happen is that the system will continue to trade for you even if the premise upon which the system is based is no longer working.

Most robots simply do not work — Quite naturally, this is the biggest disadvantage. It is unfortunate that most robots are ill-conceived. One reason for this is that it is relatively easy to sell Forex trading software because there are so many people looking to buy. On the flip side is very difficult to create an expert advisor that will work for the long term. Creating a Forex strategy takes a level of skill that most robots creators simply do not have.

They make you lazy — Any time you believe that you can spend $97-$197 for product that will manufacture money for you, you are starting off on the wrong foot. As the old saying goes, “there is no such thing as a free lunch”. This is especially true in the world of Forex trading where we as traders pay for every mistake that we make.

If you buy automated Forex trading software you are essentially telling yourself that you believe that you can make money in the markets without any effort on your part. This “get rich quick and easy” mentality has meant the demise of many a would-be trader. If you’re not willing to put in the work, then how can you realistically expect to be successful? The short answer is you can’t and you shouldn’t. Believe me, if there is some super shortcut or great robot out there I’d be more than happy to share that with you. So far I haven’t found.

So after looking at these disadvantages what is the moral of the story? The moral of the story is that you should work to learn to trade Forex and create your own trading methods and trading style. In the meantime make certain that you avoid any “too good to be true” Forex products currently available in the marketplace.

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