The introduction of automated trading software has made it very easy for the average intelligent person to get into forex trading, even if they know very little about the markets before they begin.
There is a huge choice of forex trading software, also known as robots or expert advisors. They can be downloaded for a low price and set up to trade on your broker account without you needing to understand anything about the international currency market – at least in theory.
But do forex robots work? Can a complete beginner actually make money this way?
Forex (short for foreign exchange) is simply currency trading, exchanging lots of one currency for another in the expectation that the price will change in the right direction and you will make money.
Historically it was the province of international banks and large financial institutions who began changing currencies to supply their customers for international travel or the exporting and importing of goods.
With the slackening of the gold standard in the 1970s, prices were no longer fixed and the banks started to trade currencies, buying more than they needed of a currency whose price seemed about to rise, to sell it for a profit later.
Little by little, more corporations and individuals became involved, with the internet bringing forex trading within the reach of the average person in the early years of the 21st century.
At the same time the minimimum lot size was reduced with the introduction of mini and then micro accounts by many brokers.
The result is that you can now start trading forex from home with just a few hundred dollars in capital or even less, and a computer hooked up to a broadband connection. What is more, you can even buy automated trading software so that you can do it hands free.
However, even a robot needs some attention. You do have to understand a little about the forex market just to set it up right in the first place. If you have no idea what is a pip or what stop loss and limit orders mean, you are likely to have trouble with the basic setup instructions.
Fortunately, all that you need is patience and a little time. You can easily pick up all that you need to know on the internet. This makes it possible to have a forex robot up and running on your account in just a few days.
Of course, you will want to try it in a demo account to begin. As with all forex trading, there is a risk that you will lose. In fact, it is a certainty that you will lose some of the time. All traders do.
A robot will always follow its system, so it will probably trade more effectively than a person trying to follow the same system. However, the market knows nothing of systems and can be unpredictable at times.
Automated trading software seems to work much better for the currency trading market than for stock trading.
If you are a stock trader, there is very little automation available on the open market and what there is, does not have a good rep. Perhaps stock trading systems are more difficult to automate or maybe they rely more on fundamental factors (economics and financial news).
However, for forex traders there is a huge range of choice including some automated trading software that really does seem to make money on autopilot.
