Algorithmic Trading – Automated Trading System in Forex

Algorithmic Trading:

Nowadays our life is dominated by algorithms in the form of traffic regulating lights, social media news feed, train schedules etc. More than 60 % of trade is actually Algorithm Trading. The algorithms are redesigning the traditional stocks trade as well. The past decade has witnessed noticeable increase in popularity in Algorithm Trading.

The trade of a security applying some specific rules derived from historical information. It is an innovative type of trade that allows a computer program to follow a specific set of rules. This set of instructions includes certain criteria for variables like time of trade, volume and size of order, price etc. After analyzing the variables the computer program ultimately executes a trade on its own. It uses complicated mathematical and statistical formulas for decision making. Obviously it saves you from mental fatigue.

Deep Learning or Artificial Intelligence:

Similarly advancement in Artificial Intelligence has also played a vital role in the ever-increasing popularity of Algorithmic Trading. Deep learning is another huge step in this regard. The process in which computer programmers develop program that can enhance, improve and boost itself. You can make your investment more profitable by paying special attention to deep learning.

Advantages of Algorithmic Trading:

It is mostly used by high profile trading firms. It is particularly profitable and beneficial for large scale orders. Institutional investors also make its extensive use to minimize the trading cost. It is streamlined process and serves for a number of purposes such as to create liquidity or to reduce the trading cost etc. Some prominent and attention grabbing advantages of Algorithmic trading are:

Faster execution of order
Easier trade
Rapidly and efficiently booking profits off minor fluctuations in price
Trade of securities at limited and meager price increments
Error free
Free from disturbing emotions
Less stressful
Less trading cost
Effective and efficient capability and expertise to Backtest
Discipline in trade
Improves market quality and makes market broader

Disadvantages of Algorithmic Trading:

Although Algorithmic Trading is very beneficial and it has many advantages yet it does not mean that it has no disadvantage. Like all other sources of income and trading systems, it also has a dark side and some disadvantages as well.

Too much dependence on technology
Lack of control of traders
Constant monitoring
Knowledge of programming process(technical skills)
Chances of over-optimization
Needs high- end resources
Lack of consensus results in a lot of regulations
Loses control in extreme fluctuations and irrational market conditions
Precise life span

Thus you need to constantly monitor it so that you may never miss a good opportunity. Like all other trading systems, it also has some pitfalls but hard work in Algorithmic trading ensures huge profit, just like the saying goes “hard work pays off”.

Different Trading Strategies to Trade Euro


In Forex market, all the currencies are being traded. However some currencies are traded more frequently. Euro is the second most actively traded currency in Forex market. Euro is the currency of the European Nations. The most liquid pair of currencies being traded on the Forex is EUR/USD. Euro is one half of this pair. Similarly it is also included in the most favored Minor pair of currency being traded in Forex. It is also included in G10 currencies as well. All these facts reflect the strength of Euro. The traders all over the world are trading in Euro.


There are many strategies to earn profit in trade of EUR/USD pair. However there are three strategies that have been proven beneficial and profitable in this regard. You can use them to earn heaps of profit with the trade of this most traded pair. These strategies are risk management techniques. These strategies are:


A brief andtemporary drop in commodities chart in a continuous trend is called Pullback. It is mostly applied and used in case of pricing drops of short term. It is considered as a buying opportunity for the traders after a currency has enjoyed increasing price status. Such a pullback is a positive signal that the rate of the currency is again going to rise. The rate of EUR/USD shuffles greatly in both directions. The pullback strategy is the most applied to maintain demand and supply of EUR/USD pair.

Breakout and Breakdown:

A timely decision is essential for this technique. This pair sets certain ranges for beneficial and profitable trade. Such ranges ultimately fix new trends of trade. Buy the breakout and sell the breakdown is another useful strategy to deal with EUR/USD. You should decide carefully while using this strategy. If you make a deal too early, it will result in reversal. If you wait too longer, it will be a risky investment. Thus it is profitable to minimize the timing risk. You can do it by deciding a partial position in case of break out or break down of the currency pair.

Narrow Range Patterns:

It is another important strategy to deal with the EUR/USD pair. A trading range occurs if a currency is traded between too high or too low rates for a certain duration of time. The top range offers resistance against price increase while the lower range offers support for price. This strategy predicts that EUR/USD’s price bars will increase for breakout or breakdown. The rate of this pair changes and shuffles into prominent barriers and then it stays still, ultimately prints narrow range pricing bars. It reduces risk in the investment.

Best Tips to Make Money in Forex Trading

Focus, discipline and practice are the main factors that are essential to earn heaps of profit in Forex Trading. Emotions play a vital role in the life of humans and these emotions can lead traders to huge losses. Emotions like anxiety, fear or greed can easily divert the attention, so the traders need to learn to deal with the emotions calmly and casually. Handling their own emotions in pressurized situations makes them “Ace” in Forex Trading. There are some main points which every Forex trader should exercise to become profitable.

Trading Styles and strategies
When you enter the world of Forex Trading, you should choose wisely the trading strategies and style and stick with it. Traders can choose from a wide range of strategies and styles. Every trader has different goals and aims. So each trader should select the trading style according to his own goals. For example, some traders can only indulge in day trading if they do not want to be a position trader for long term investments.

Trading platform and Brokers
You should wisely choose a trustworthy broker to invest your capital and do proper research before selecting the broker. A huge number of brokers are there to help the traders, you need to decide which broker will provide best services to achieve your goals. Same is the case with trading Platform. A trustworthy broker with a reliable platform leads to profit in Forex Trading.

Decision Making
After selecting the broker and the platform for trade, you need to decide how and when you will buy or sell currencies. You need to have the basic knowledge of entering and exiting trade. Similarly you need to research to decide which currencies pair to deal and which analysis type you are going to use. Some traders rely only on Technical Analysis and some purely on Fundamental. Which every method of analysis you choose you must be consistent with it. Experiment with different pairs of currencies can grow your exposure as well. A consistent methodology of trade can support the traders to keep up and handle the constantly transforming dynamics of financial market.

Entry and Exit points
Traders can be stressed about when to enter or exit. Sometimes the conflicting ideas on weekly chart and intraday chart make them anxious. Similarly a minor mistake or an untimely decision regarding the buying or selling can result in huge loss. So before trade, You need to observe and analyze both the weekly chart and the daily chart. Decision making on the basis of only one of them cannot do any good to you.

Capital at Hand
Mostly traders incur losses because they did not have sufficient capital at the moment of grabbing the profitable opportunity. They miss the chance and then regret afterwards. Therefore you should always have sufficient capital at hand.

Lastly you need to keep in mind that humans are bound to commit mistakes and mistake in Forex trading means loss. So you should be well prepared for the chance of loss as well.