Black
box trading, or automated trading, is becoming more widespread, and the reason for
this is that it allows anyone, even a new trader, to make market transactions
that would have been otherwise impossible without these technologies. Not only
is the technology becoming more affordable, but there are a lot of benefits
that traders can get out of it, not the least being your trades are placed
automatically in your account.
How to Get
Into Automated Trading
The
simplest and most effective method to get into auto trading is to use an
existing system. This isn’t as simple as just copying of course as you also
need to know how these systems function. If the idea of entrusting your funds
to another person or a system makes you uncomfortable, learn as much as you can
about it. Does the system work with ranges or trends? What kinds of strategies
are in place, and are they for short, medium or long term? Just like with the
stock market, you need to check the reward and risk ratio of each strategy, and
the win rate as well. In other words, the more you know, the easier it will be
to pick a forex automated strategy.
Essential
Features of Trading Platforms
Automated
trading systems should provide you with real-time and historical data that can
help you assess strategies. With automated trading you should know each
strategy’s profit and loss as well as other vital facts and figures like the
risk/reward ratio, the loss/win percentage and intraday and max drawdowns.
Black box trading will give you all the stats necessary to get some insights
into each approach.
Modifying
Strategies to Meet Your Needs
If
you’re the type who likes to tinker with different strategies then this is the
approach for you. Under this type of trading you take an existing system and
make modifications until it suits your style and preferences. For instance, you
may have found a forex strategy that generally suits your taste but you don’t
like the limit levels imposed. Or perhaps the strategy uses a moving average
that you’re not comfortable with and want to change it.
If
this is how you want to trade, you’re in luck since there are a lot of web
based trading platforms that provide such types of customizable strategies.
Using this approach you can customize parameters like currency pairs, stop loss
levels, indicators, timeframes and many others. These platforms also allow you
to optimize and back test these strategies.
If
you are an advanced trader you will probably want to develop your own strategy
from scratch. There’s a reason why this is designed for advanced traders; it
takes a lot of time and it can be difficult. But if you know a system that’s
consistent, there’s no reason for you not to try it.
If
you are going to use black box trading while customizing strategies, it is best
to open a demo account (virtually all platforms allow this) so you can try out
the different strategies. If the results are satisfactory, you can go live and
start trading.
No comments:
Post a Comment