The Essentials to Picking a Forex Robot

If you follow Forex in any way, you know that Forex robots have become wildly popular over the past few years. With the overabundance of Forex robot sales pitches, it is hard to find a robot that is actually successful. In this article, we will show you how to find the best Forex robot for your trading style, as well as what you need to know about your EA and what your realistic goals should be.

If you are looking to purchase a Forex robot, you are most likely looking to make a profit. This means different things to different people. You may be content making $50/week, or you may be seeking uch bigger money. The greater your risk tolerance, the greater the chance you will strike it big. At the same time, taking on more risk also means the chance to take bigger losses.

Your risk tolerance is going to be a key factor in dictating which robot is best for you and your trading goals. After determining this, you should look for robots that suit your trading style and analyze various statistical factors including maximum drawdown, profit factor, expectancy and efficiency. A majority of this information can be found in the Best Forex Robot report at www.bestforexrobot.com.

One thing you should realize upfront is that finding the robot that is best for you is going to cost you both time and money. There are numerous elements to look for when choosing your robot. Much of the key statistical information needed to make a sound decision can be found in the best Forex robot toolkit. In this article, we will focus on one key criterion called robustness.

It is crucial to understand that most Forex robots only work efficiently in certain types of markets. What does this mean? Some robots perform better in range bound markets while others are more effective in trending markets. The problem lies in that it is often very hard for a trader is to determine if the market is in a range or trending. One key thing you must remember is in order to achieve success with your Forex robot you should never give up the gains that it makes during a favorable market when the market is unfavorable.

So what does this mean? Assuming that your robot is most efficient in a trending market, as soon as the market starts to range you will run into complications and might begin losing money. In order to be successful with this robot you cannot lose money during the ranging market that you made during the trending market.

Furthermore, you must determine if your robot is sustainable which entails backward and forward testing it through a range of market conditions. If your robot's profitability is sustained, than it can be considered robust. Keeping this in mind, you must always remember that past results are never an indication of future performance.

You need to assure that a robot has been both back and forward tested by the vendor before even considering making a purchase. Once you have decided to go forward with the purchase you need to perform your own testing. A good Forex broker can show you how to do this. At this point, if you are unhappy with the robots performance, you should return it if possible. On the other hand, if you are happy with the robots performance, you should run it on a live micro account at first so you are only risking minimal capital in the beginning.

Our hope is that after reading this article, you should now have the proper tools and confidence to embark on your robot trading journey. Let's take a quick moment to do a final review of what you need to be a successful robot trader:

1.) Determine if your robot is robust and in line with your expectations of return.

2.) Perform extensive testing of your robot before taking it live.

3.) Start trading live on a micro account to minimize losses.

Following the guidelines above will help you get one step closer to Forex success.

Understanding the Basics of Fundamental Analysis in the Forex Market

Traders typically approach financial markets in one of two ways: either through technical analysis or fundamental analysis. The reality is that history is full of traders who have had very successful careers as traders that employed both of these types of analyses.

In fact, in Jack Schwager's best-selling classic, Market Wizards, two of the traders interviewed are Ed Seykota and Jim Rogers. Rogers is quite adamant in his statement that he believes it is impossible to make a living as a technical trader. He goes so far as to say he has never met a rich technician. Seykota actually shares the exact opposite story. According to Seykota's own interview, he was a struggling trader when he traded according to fundamental analysis. It was not until he became a technician that he started to make a living trading financial markets.

As stated, successful traders throughout history have employed both technical and fundamental analysis. In this article we are going to break down the basic principles of fundamental analysis in the forex market.

Fundamental Analysis is commonly defined as a method of evaluating a specific security in order to determine its intrinsic value by analyzing a host of economic and financial data. In the foreign-exchange market, a security would be a currency. Market participants are continually analyzing the emerging fundamental from a country in order to determine the intrinsic value of the country's currency. There are several key economic indicators that every trader should understand on a basic level. Fluctuations in the data of these key indicators will generally cause the value of a currency to rise and fall.

Interest Rates

These are the single greatest driver of currency value over the long-term. Most Central Banks announce interest rates each month, and these decisions are watched very scrupulously by market participants. Interest rates are manipulated by Central Banks in order to control the money supply in an economy. If a Central Bank wants to increase the money supply, it lowers interest rates, and if it wants to decrease money supply it raises interest rates.

Gross Domestic Product (GDP)

GDP is the most important indicator of economic health in a country. A country's Central Bank has expected growth outlooks each year that determine how fast a country should grow as measured by GDP. When GDP falls below market expectations, currency values tend to fall and when GDP beats market expectations, currency values tend to rise.

Inflation

Inflation destroys the real purchasing power of a currency, and, therefore, inflation is very bad for the economy in most circumstances. Each year a normal rate of inflation between 2-3% is expected, but if inflation begins moving beyond the upward targets set by the Central Bank, a currency value will actually rise due to expectation of an imminent rate hike. Higher interest rates tend to fight off inflation.

Unemployment

We will discuss consumer demand in a moment, but people are basically what drive economic growth; therefore, unemployment is the backbone of economic growth. When unemployment levels increase, it has a devastating effect on economic growth; consequently, when the labor market contracts and unemployment increases, interest rates are often cut in an attempt to increase the money supply in the economy and stimulate economic growth.

Consumer Demand

As stated in the previous point, people are what drive economic growth; as a result, healthy consumer demand is essential to the normal, healthy functioning of an economy. When consumers are demanding goods and services, the economy tends to move forward, but when consumers are not demanding goods and services, the economy falters.

Even if you are a technical trader, it can still be very helpful to understand these basic elements of fundamental analysis. The best forex course will oftentimes offer further insight into how the emerging fundamentals drive price behavior.

How a GDP Announcement Can Boost a Currency

Forex Trading: How a GDP Announcement Can Boost a Currency

The Australian GDP announcement for the second quarter of 2012 showed that the Australian economy grew much more than expected. The economy grew 1.3%, compared to official estimates of a 0.5% growth. After a month of pessimistic economic news for Australia and in the wake of further interest rate cuts, such a result came as welcome news for the nation and sparked activity in forex trading.

The Australian Dollar (AUD) rallied in many of its denominated currency pairs, showing particularly strong gains against the US Dollar (USD).

The AUD has staged a recovery in forex trading ever since the unexpected half-point interest rate cut made by the RBA on May 1. The encouraging GDP figures account for the last spike seen in the graph above, showing a strengthening AUD despite the RBA cutting the rate by a further quarter-point at the start of June.

Fittingly for forex trading and currency pairs, there are always two sides to every coin. Just as the AUD strengthened on the back of the GDP announcement, the USD has almost simultaneously weakened after economic data released by the US Bureau of Labour. US non-farm payroll figures, a key economic indicator for the country released on June 1, showed growth in the employment sector that was far below national estimates. What this has served to do is strengthen the calls for another round of quantitative easing, which in the short term would devalue the USD due to its inflationary effect. Such a move could spark further movement in forex trading against the USD, and possibly towards the Aussie.

It is important to see how a GDP announcement and other economic news can influence a currency pair. You can keep track of all the latest forex trading developments with IG Markets. They provide a dedicated forex focus, which keeps track of all the recent movement in the major currency pairs, as well as an extensive collection of analysis and frequent market updates. You can find the forex focus by clicking this link.

The above information should not be construed as investment advice. Please consider the Product Disclosure Statement available from IG Markets. CFD trading can result in losses that exceed your initial deposit. In addition, you do not own or have any interest in the underlying asset.