This article looks at the different technological aspects of forex trading systems.
There are two steps to successful trading, one is to adopt a business-like approach and the other is to utilise effective trading technology. In previous years, one would be required to call a forex broker when executing trades. This would be time-consuming, and by the time an order was filled the market price would have swung. Of course, you would not have realised this as there was no access to live news feeds.
Nowadays, the trading technology available to retail traders is far more advanced. Due to the online format of the foreign exchange market a trader is now able to access online trading platforms with live newsfeeds and technical trading tools. Further technological advancements include automated forex trading systems and even live commentary.
In order to begin on this market you will require three essential items: a computer, a reliable internet connection and forex trading software.
A computer or laptop is the basic tool required to trade on the forex market. It is via the computer that all trading will take place; this includes analysis, testing of forex trading systems and the execution of the trade. Ideally, one should reserve a separate computer for trading as this will make the running of trades more efficient. However, many individuals trade on their personal computers with other applications running in the background such as games. If this is the case, it is important you use anti-virus software and run regular background scans.
It is important that your computer have a high-speed processor with the maximum amount of data storage you can afford. If possible, you should purchase a computer capable of supporting multiple screens. This will allow for viewing of multiple markets and trades at the same time, and is highly beneficial for short-term strategy traders. It is also recommended that you hardwire all connections to your computer, and have a telephone that operates even when the electricity is down. It is important to have a means of contacting your broker even during a power outage.
The most important aspect of a computer is the back-up battery. You must ensure that it is charged and will maintain the computer for a sufficient amount of time should you experience a power outage.
The internet connection
Due to the high-speed pace of the foreign exchange market, a trader requires a high-speed internet connection in order to keep up. In speedier your internet connection, the greater your advantage over other traders as your orders will be submitted and filled sooner. It is important to note that a few seconds delay in connection can mean the difference between profit and loss.
The forex software for forex trading systems
Trading software has three primary purposes – to analyse the market, to test forex trading systems, and to execute a position.
The analysis of the market allows you to view and alter any price charts dependent on your style of trading. The testing ability is a fairly new feature allowing traders to perform multiple tests on a strategy. This allows one to examine the effectiveness of systems and improve on any errors. Finally, the execution of order does what it says – it executes an order based on certain parameters.
The trading software is available in various levels of sophistication from fully automated to semi-automated.
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