| Forex trading software has a noble aim: to | | | | trader this is not always practical. |
| completely automate the forex trading process. | | | | In comes automated trading software - software |
| Novice Forex traders sometimes view forex | | | | that will study all the different technical indicators |
| trading software/tools unrealistically, to automate | | | | for a particular currency and then come up with a |
| the money making process with an absolute | | | | trading signal - telling you whether you should buy |
| degree of accuracy. Realistically, forex trading | | | | or sell that currency. |
| software/tools are used to either produce trading | | | | All of these software packages don't come equal |
| signals before you make the actual trade, or the | | | | though. The really good ones will do all the |
| more sophisticated programs can be set to make | | | | analysis, arrive at a trading signal and then give |
| the trade as well. | | | | you a detailed report on how it came to that |
| When you are trading on the stock market, you | | | | recommendation. This way you will learn to |
| would typically choose one or more companies | | | | understand how good trading decisions are arrived |
| and start watching their shares. You will study | | | | at and eventually be able to override the program |
| their financial statements. You will listen to what | | | | with an even better trading decision of your own. |
| other traders say about their stock value - | | | | The less sophisticated - and cheaper - packages |
| whether it's undervalued or overvalued. But | | | | will still analyze the data and very likely arrive at |
| whatever you do, it is unlikely that you will ever | | | | the same recommendation, but it won't give you |
| get access to the information that can really | | | | the detailed background that will enable you to |
| make or break a particular company. Things like | | | | understand that recommendation better. |
| technological changes that will make their products | | | | Investors and traders who base their trading |
| totally obsolete. | | | | decisions on fundamental analysis will not doubt tell |
| With forex it's different - at least theoretically. | | | | you that the basic principle underlying these |
| The information about factors influencing the price | | | | trading recommendations is flawed: trading |
| movements of a particular currency is readily | | | | decisions should be made based on 'fundamental' |
| available to everyone, especially for the major | | | | or 'real' factors, such as inflation, interest rates |
| currencies. So all you have to do is study that | | | | and the trade balance. Many will no doubt point |
| information and make money, right? | | | | out the effect sudden political instability can have |
| In reality there are hundreds of different | | | | on the value of a currency. |
| currencies. Price movements in one currency will | | | | Sworn supporters of technical analysis will of |
| very often result in similar price movements in | | | | course explain that there's no need to worry. The |
| another currency. To study all the factors | | | | indicators will pick up when the currency reacts to |
| involved will still take a lot of time and require that | | | | any such incident and the forex trading software |
| you have access to sophisticated charting and | | | | will in turn respond with a buy or sell signal for |
| data analysis software. If you are a part-time | | | | that currency. |