Algorithmic and High Frequency Trading: The Future of Forex Market Analysis?
algorithmic trading
Programming, or algorithmic, is simply the use of computer programs to enter trading orders into the market, with the computer algorithm calculating inputs such as the time, price and amount of the order to be placed and these systems are designed to operate without human intervention. intervention.
They can be long or short term, but most are short term and looking to make quick profits usually within a day. The logic behind them is that they can spot price discrepancies and profit from them and, unlike a human, they are not subject to emotions and save trader time as they are executed automatically.
High Frequency Trading HRT
The term High Frequency Trading (HFT) basically means “trading with the system firmly focused on speed of execution.” An HFT system can decide to run and order in less than a second and is being used by many institutions. The idea is to get the order in before the crowd and take advantage of price discrepancies and make money from them. The idea is not just to execute orders quickly but in large volume, so that the system can settle the trade quickly. All trades are normally closed within minutes or hours and no positions are normally held overnight.
Doesn’t it all sound so impressive and the future of trading?
Well as an experienced trader I would say that people have been trying to beat the market since trading started and nobody has succeeded yet and the reason is obvious because markets don’t move on mathematical models and a computer can’t think that can only react. A computer can only react to change, not anticipate it, so a simple system will perform better than a sophisticated algorithm, period.
New names for losing Forex strategies
Algorithmic trading is just another word for robot trading that has lost its flavor a bit due to the large number of systems sold for public consumption with fake track records that lose money.
Even more ridiculous is high-frequency forex trading, which places the emphasis on nanosecond orders to beat the market and make quick profits. All this does is make sure that the transaction costs are so high that there is no chance of making money. Didn’t this used to be called scalping or day trading? Of course, these names aren’t the flavor of the month either, due to the number of systems that have sold and lost money, so marketers must come up with a new name to capture the public’s imagination.
Beating the market with a computer is nothing new and high frequency, algorithmic Forex trading is just the latest fad that claims to beat the market but causes users to lose.
How to win at forex trading
If you want to win in Forex trading, follow the old money making route which is to learn the basics which are easy to learn and then think for yourself and you can enjoy success in Forex trading.