FOREX TECH: A Glance at Automated Forex Trading - A Controversial Trend in the Financial Markets

As the World Automated Trading Championships rapidly approach their eagerly awaited conclusion, the idea of pre-programmed trading robots has emerged as an extremely controversial talking point. Of particular interest is the concept of high frequency trading (HFT), which utilizes carefully created algorithms to execute multiple traders simultaneously.

The sudden explosion of automated trading has forced international governments to investigate the matter further, amid concerns that it may be triggering increased market volatility and manipulation. With Australia poised to introduce a number of stringent regulations and both the European Commission and federal government of the U.S. considering supplementary action, the boundaries of automated trading are set to be altered considerably.

What is Automated Trading and Where is it Most Commonly Practised?

Automated trading is primarily driven by systematic expert advisors, which serve as individually designed programs of software. They are written in the MetaQuotes programming language (MQL4), and remain synonymous with the globally renowned MetaTrader4 platform. Essentially they enable automatic trading and eliminate human error and emotion from the investment process, as individual orders are executed according to algorithm’s and without direct intervention from traders.

Have a quick glance at the following Youtube video to check out the interface of Systematic:

Given its relentless and extremely volatile nature, it should come as no surprise that the forex market plays host to a significant level of automated trading. The concept of automated forex trading enables investors to operate profitably without being forced to monitor the market throughout the course of each day, while it also alerts traders to breaking trends through real time communication. Significantly, this type of software also prevents traders from making investments based on emotive or sentimental factors, which can boost profitability significantly over time.

Why is the There Controversy Concerning Automated Forex Trading?

Much of the controversy concerning automated trading has focused on the forex market, however, which is already distinguished by its high volume of activity and pronounced volatility. There is anxiety among financial regulators and traders that an enhanced level of HFT could overwhelm the forex market, and create an environment where it would be almost impossible to profit without automated trading software. The over reliance on technology is another significant concern, as any failures could incur huge financial losses and destabilize the market further.