The Lab of FX Automated Trading

1. A Wide Range of Investments and Trades

There are many objects to trade in a market. A well-known example is the stock market. Many people may think of "stocks" upon hearing the word "trade. 

Another major example is the investment trust. This is the investment in which the investor's money is entrusted to another individual for management. Funds such as mutual funds and hedge funds are included in this type of investment. 

Many investors also trade through other entities such as future contract and real estate. In recent years, trade using option contract has been popularly used as well.

2. Advantages of FX

Let's have a closer look at the pros of FX, compared to the options mentioned above.

• Leverage
  Leverage enables you to trade far greater amount of money than the money you deposited, which leads you to greater chances to success.
• Liquidity
  Liquidity means how easy it is to trade FX, stocks, etc. in ther market. In general, the greater the number of buyers and sellers is, the easier it is to trade in the market, which means the market offers a high liquidity.
• Market opens for 24 hours
  The FX market is the only market that opens for 24 hours. Each currency is asked and bid for 24 hours in any market all over the world. It could be a great advantage over other options such as stocks, especially for office workers who have to go to the office in the Monday morning. But please keep in mind that the market is closed on the weekend, like other options.

Perhaps the most attractive point of FX may be:

• Free Automatic Trading
  If you are planning to start automatic trading, FX will be second to none. As of April 2008, one can easily obtain major currency pairs post-2004 via internet. Automatic trading softwares can also be used for free if you set up your own account. Automated trading system has never been this easy for anyone to get into.

3. Disadvantages of FX

As listed in the previous section, FX has many merits. However, such advantages come with as much disadvantages also. 

• Leverage
  Yes, you have seen this listed under the "Advantages." But leverage is a double-edged sword that could harm you just as easily. Attempts to make big money using small funds naturally comes with at least some level of financial risks. Particularly in cases when big leverage is being utilized, the trader needs to hedge the risks skillfully. 
• Difficult to Predict the Fundamentals
  Foreign exchange rates inherently involves many more variables than domestic stock markets. For example, geopolitical risks may often be as influential as the interest rates established by a bank. Given the complex influences and the inherent risks of the leverage, FX is not recommended for long term use. 

4. It's Up to You!

As explained above, there are many merits and demerits to FX. Ultimately, it is up to the individual to use FX or not, but we recommend you open a demo account to try it out! With a demo account, you can experience the appeal of the FX without actually jeopardizing your funds! 

If you don't have a particular preference for an automatic trading system, opening an account with a domestic FX provider is another option. Because overseas fee can be costly, opening an account with a foreign FX operator may not be a feasible option until you are familiar with FX.