FX Trading Psychology Can algorithms correct psychological flaws?
An algorithmic approach completely removes psychological flaws from the trading process by relying on technolog y
to take
on pre-defined p aram e t e r s . Algorithms also take
advantage
of FX trading opp or t u n i t i e s 24- hou rs- a - d a y over the five-day trading week. Some of the largest financial institutions
in
the world rely on algorithms to ensure a consistent and sustained trading performance that eliminates human error.
But here’s the catch - these algorithms
are
often formulated by some of the world’s most traders who
competing
Algorithm-based strategy should be thought of as a tool to increase manual trading competency
experienced have
traders FX significant
knowledge and experience of manual trades. These algorithms are also not available to
and
companies. Don’t be fooled into thinking that adopting an algorithm-based strategy is a
26 FX TRADER MAGAZINE July - September 2013
buy for individual FX traders are simply not good enough to
yield significant returns.
These products can be typically bought on the Internet for around $150, but are really not worth purchasing. Why would Banks and blue chip companies invest huge sums of money into
M a st e r ing psychology is u ndoubt e d ly one of the most important skills to learn when it comes to successful trading. So serious FX traders should regularly check to see how they are thinking their
about trading
overarching strateg y
and whether they have the correct mindset. They should also combine the best aspects of manual and algorithm-based trading
to produce consistent
profits that are sustainable and based on evidence.
Jarratt Davis decisions
guaranteed way to FX trading success. It should be thought of as a tool to increase manual trading competency.
The quality of algorithms,
which are often referred to as FX robots, that are available to
developing effective algorithmic strategies otherwise? With FX robots, it’s a case of getting what you pay for. But the most important point to bear in mind with algorithm-based strategies is that they can work exceptionally well
in tandem
with a strong manual approach at a certain trading level, as they help identify instances of recency bias, greed and fear
in trader’s
psycholog y. Conclusion
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