Look up any website for advice on forex trading, and you’re likely to quickly be introduced to the phenomenon known as automatic forex trading – there will be plenty of advertisements all around that try to gently remind you that you could make your life a lot easier sleeping on a beach somewhere while software design with artificial intelligence manages to play the market conservatively and make you a good deal of money. Often, they tell you that you could easily triple your money in a year doing nothing at all.
Automatic forex trading software usually costs about $100 or so. You just set it up once, provide it with a little capital (even if you only have five dollars) and it keeps going. Its programmers have supplied with all kinds of mathematical algorithms that show it how the markets are supposed to behave. They look at current market trends, compare them with how things were in the past, and with their algorithms, make automatic calls to trade your money.
Algorithm-based trading isn’t anything new. In fact, the government pension and Social Security funds are invested with extensive use of trading software – they use them to invest in the stock market. It’s not that automatic forex trading software doesn’t work. It does. It’s just that it only does so in a very limited way.
These programs only have set kinds of reactions in place to answer any market situation with. The markets are very dynamic. They are always changing in every direction. Software isn’t really able to recognize anything new that happens. Sometimes, they can make mistakes that not even an illiterate human would make. And they can lose money.
Typically the businesses that design sell these software packages aren’t very large operations. Microsoft, Google, Oracle – there is no major name in this business. Go to one of these websites, and you see the typical website design formula used that you see in websites dedicated to running your car on water or ones that promise to make your wife very happy with you in bed. They are full of testimonials, moneyback guarantees, and no actual information about how these things work.
That’s what should actually get you a little worried. You mustn’t think that these software packages are an absolute lie. They aren’t. They do work some of the time, and they work well. It’s just that the way they market these products makes you think that you’re going to be able to tell your boss exactly what you think of him sometime tomorrow and then retire three minutes later because you have made that much money.
Okay, if you were a programmer who just made software like this, would you not just set it to work for you instead of selling it for $100 a pop and trying very hard to find customers?
The software they sell you can make you small gains every day. And it’s quite worthwhile, too. It’s just not going to get you rich. The markets are extremely complex. Machines cannot figure them out just yet. Basically, if you’re an absolute novice, you should leave automated systems and robots alone.
They may be a great tool to help you work when you’re sleeping, if you’re ready a Forex expert and you know how exactly to tweak all the parameters on such a tool. If you’re going to go with the default settings though, you should probably keep your $100.