Forex Automated Trading Systems
www.morganmitchellpartners.com
I have heard as many stories for as against automated trading systems as I have heard for and against Technical Analysis.
A recent news story claimed that electronic trading on the NYSE is now 40% executed by automated trading systems. In Forex Trading, banks and hedge funds generate significant volumes of trades using algorithmic trading systems each day.
Having grown up in a Technical Analysis background using a manual trading system I was initially both hesitant and excited when I first learned about automated systems. Surely they are superior I thought to myself, they wont make mistakes like humans do, with no coffee breaks or sleep required we have the perfect 24 hour , 5 day a week money generating system.
Ah sigh , finally the perfect world was here, all the potential of the techno universe would finally be fulfilled.
As usual our human aspirations were way ahead of the reality and many systems failed to meet the expectations of the dreamers, automated systems in many quarters got a bad name, except perhaps in the lofty heights of the financial districts where millions of dollars have been expended earning billions of dollars by the big name players. In the market each player must have an edge, a football field hangar of super computers , filled with enough quants to fill it was the edge needed in the early days.
Computer power today has done to automated trading what it has done to all industries, leveled out the playing field and made simulations and calculations much easier to perform. The nett effect is that the drudgery of this work is now eliminated and the core focus should be on best practice.
For those who have used the spare time to their advantage, studying these best practices and developing new methods the results have been a radical improvement in system design and the subsequent results are bearing fruit in many broad and niche areas of the market.
No doubt a number of Einsteins have found their calling. But I still hear the moans and groans about system trading, almost as loud as always. Why?, well I guess it doesn’t matter what PC power you have access to, a developer still needs the core knowledge in the field of their endeavor. If you are a Technical analyst system developer, you still need the core professional skills of a Technical Analyst to take advantage of all that PC power, hence the moans and groans. In another article I will write on the failure by the masses to achieve instant wealth and stardom in the FX expert advisor market, but we will save that for then.
Over the coming months we will concentrate on several themes;
1) What it takes to develop a good Automated Trading System
2) Various types of Automated Trading systems and their niche applications
3) Current tools and development software for automated systems
4) Assessment of the performance of a automated systems
Perhaps we will add to these themes but for the moment we will start here.
Please feel free to comment and email your thoughts.
MorganMitchell Partners provides marketing and FX Market advisory services such as broker execution/software services to small to medium size Automated Trading System developers working in the forex market place. For further information visit our website at www.morganmitchellpartners.com
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