Forex Figures

One of the unique parts of the Forex trading world is the fact that it’s most common trading platform was built with the EA, or expert advisor in mind. With a basic programming language built in, it is possible to build auto trading programs which allow the trader to go on about their lives while the platform executes trades for them.

The one thing that all automated Forex traders have in common is that they are based on hard coded mathematics. While proponents of this kind of trading will cite the various advantages, they all have serious flaws in their ability to adjust and react to the markets.

For example, the element of trading psychology is taken out of the equation is you are using an automated program. In fact, this is the number one reason people buy these programs in my experience. While this is in fact true, it doesn’t take into account the psychology of the trader when the program takes serious draw downs. It also doesn’t take into account the trader’s psychology when the market conditions change and the system doesn’t understand that. (A common flaw in the realm of systems)

Speaking of not understanding changing conditions, there is a well-known system that absolutely imploded a few years ago when the financial crisis hit. The idea of the system was that every time one of the “carry trade” pairs fell, in other words all of the XXX/JPY pairs, it was simply a buying opportunity. While this was true for a couple of years, once the markets finally fell for good – the system simply kept buying more and more, and eventually blew up any account it was trading.

Another major problem I have with automated trading systems is that they aren’t aware of the news. While I am not a news trader, I certainly don’t place a trade 5 minutes before the Non-Farm Payroll report! The hard-coded system out there doesn’t know any better, and if they get a signal at that time, you will be in the market. Unfortunately, those time periods are very volatile, and you never know what you are about to deal with.

Most importantly, I find that if you are focusing on the profits only – as the very idea of auto trading suggests, you simply don’t want to learn about the markets. Not understanding the markets is akin to being an uninformed investor. Successful Forex trading demands hard work and forethought, and having someone else program a “Get rich quick” program won’t likely yield the desired results.

These days, it’s impossible to pick up a newspaper without reading about the recent revolts in Egypt, Tunisia and Libya which have shaken not only the region in which they took place, but the global political landscape as a whole.  There’s no question that fragile alliances have been all but shattered, past agreements have been called into question and the once-probable future has become entrenched in doubt.  Most people reading these stories will digest the chaos and go about their regular routine.  But for Forex traders, events occurring across the world become almost personal, as they have a definite impact on the Forex market and on the trades that each trader executes.

Ironically, even more localized events can have a profound impact on the trading arena.  National holidays, elections and even acts of nature can throw a curveball into a trader’s supposedly premeditated plans.  But practically speaking, a Forex trader can’t just monitor the news all day, because that would impede his or her ability to trade continuously.  So where is the fine line between staying abreast of global happenings and translating this knowledge into profitable action?

The answer to this question is something that I’ve been struggling with in the short time that I’ve been trading, and I still haven’t found the perfect balance – if you have, please feel free to share!  Still, I believe that the secret to successful Forex trading is not only to keep your eye on the mathematical figures that are essential to the field, but on important figureheads that can impact the global economy, and on Forex experts – industry figures whose insightful analysis can hopefully steer you in the right direction.

Within the realm of this Forex blog, I hope to share with you some of the Forex trading figures that I’ve found especially influential, and to dissect some of the “simple complexities” of Forex trading of the industry so that Forex figures become understandable instead of incomprehensible.  I welcome your questions, feedback and comments, and I look forward to sharing my trading adventures with you.