Over the last few years there has been a surge in the development and production of online trading with the use of automated Forex software. For the most part this type of software, especially for the home user, takes care of all of the buying and selling of currency pairs. They can be limited in their strategy because they are designed to work within fixed parameters. But as one reviewer said, "… some traders have had their accounts closed by the brokers because they doubled their investment!"
Everyone must know there are risks involved
When sales information is distributed the emphasis is always on the amount of money that can be made and is likely to be made by using their software. While it is true that a particular system, if stuck to stringently, will give good returns as promised if the system is accurate. Any system of trading that is flawed will extremely fall flat. However there are some excellent programs out there that do deliver what they promise and although they also make losses on some trade they more than make up for them on their profits.
What is the degree of success?
This is probably the most important question that should be asked by the consumer. Many people, that are the consumer, and their counterparts, the software developer, have different views on what they consider to be a fair return. On the one hand the consumer, potential customer, would like a huge unlikely sum of money as a return for relatively small investment. The developer would like to sell as many of the product and calm the fears of the would-be buyer before they back away from the deal. Anybody that understands business would understand why salesmanship works, and why any salesperson would say only positive points to get their contract signed and the check delivered. Nobody wants to be sold by product that they do not really want, or is the wrong product for their needs.
What are the risks?
All type of investment is a risk. Your bank takes your money that you save and lends it to a business venture that even with safeguards in place could go bankrupt and lose all of your capital. In the giant pool of money that is the accumulation of all the investors, the bank customers, some will be lost and some will pay well resulting in net profits. And this is the essence of trade, however sometimes even banks get it wrong as I am sure we are all too well aware now. Forex does carry more risk because there is only one investor, and that would be you. However the profit will be yours alone to do with as you will.
Why professionals do not use automated Forex robots?
The short answer to this is that they do, to a certain degree. No machine could ever understand the intricacies of human life on an unstable planet. And for this reason there is no way that the mathematical formula or algorithm could ever foresee circumstances that could affect trading in a currency pair for both the short term and long term deals. There are situations such as armed conflicts, changes in government, droughts, virtually any tragedy that can have long term or even permanent implications to a given currency. The only way to find this information is by watching newscasts on current matters and reading well informed newspapers. This is clearly beyond the scope of a piece of software. On the plus side, there are many treaties to trade against and the chances of picking one of these is extremely remote. The majority of trading the currency pairs will trade under normal influences making them predictable to computer software and to some very savvy professionals.
As a final point, only you can decide if this investment is really for you. If this article has made you feel uneasy please be aware that a common phrase in the foreign exchange markets is 'Forex carries risk'. And while it is true that you can make huge sums of money the gains are a reflection of the amount of capital you want to invest. Simply put if you invest a single dollar the return would only be cents. If you invest thousands of dollars the returns could be hundreds. However the losses could have been all of your capital outlay.
