Algorithmic and High Frequency Trading – The Future of FX Market Analysis?

Algorithmic trading

The program, or algorithmic, is simply the entry of trading orders into the market using a computer program. Computer algorithms calculate such inputs as time, price, and order quantity, and these systems are designed to operate without humans. Intervention

These can be long or short term but most are short term and usually want to make a quick profit in a day. The rationale behind them is that they can detect price inconsistencies and benefit from them and not be as emotional as a human being there and save operator time because they run automatically.

High Frequency Trading HRT

The term high-frequency trading (HFT) is basically “dealing with a system that focuses strongly on the speed of execution”. An HFT system can make an execution and order decision in a matter of seconds and is being used by many organizations. The idea is to take orders before the crowd and take advantage of price inconsistencies and make money from them. The idea is not just to execute orders quickly, but in large quantities, so that the system can quickly disable trade. All trades are usually closed within minutes or hours and no positions are usually held overnight.

Doesn’t it all sound so impressive and the future of trading?

As an experienced trader I would say that since the beginning of trading people have been trying to lose the market and still no one has succeeded and the reason is clear that the markets do not move to mathematical models and a computer cannot think that it can just react. A computer can only respond to changes without anticipating it so a simple system will work better than a sophisticated algorithm – period.

New name for losing forex strategy

Algorithmic trading is another term for robot trading that has lost some of its flavor due to the huge number of systems sold for public use with a fake track record of losing money.

Even more ridiculous is the high frequency forex trading that emphasizes – ordering in nanoseconds to beat the market and make a quick profit. All this ensures that the cost of the transaction is so high that there is no chance of making money. Wouldn’t that be called scalping or day trading? Of course, these names are not the taste of the month, because of the amount of systems that have been sold and lost money, so marketers need to find a new name to capture the imagination of the people.

Beating the market with a computer is nothing new and algorithmic and high frequency forex trading, the only recent hype that claims to lose the market but is seen to lose users.

How To Win In Forex Trading

If you want to win in Forex trading, go for the old fashioned way of earning money which is to learn the basics that are easy to learn and then think for yourself and you will be able to enjoy the success of Forex trading.