One of the great advantages of Forex Trading over that of other asset classes is the ability to trade in a 24-hour market. This has given rise for the need for many Forex Traders to automate their trading systems. The process of creating and testing an automated trading system can be a long one and even if a trader takes the time necessary they can never be sure of the results.
One of the factors that many traders don’t take into consideration are the constant changes that are happening in the market. The current market conditions are very different from those just a few short months ago. Changes in volatility are probably one of the greatest contributing factors to changes in market conditions. These changes may impact the results of any trading system.
One way to help with these changes is to use machine learning algorithms in the creation of any trading system. This basically means that the algorithm learns from experience. There are several categories of this type of learning. The first would be supervised learning where the system is told what the correct answer should be. A second type would be unsupervised learning where the algorithm does not know the correct answer but learns it on its own. If it knows that a specific trend should be followed, then with that data would be used to determine the path to be taken.
In trading terms, the algorithm looks the value of a technical indicator then conducts a trade and then evaluates and changes with the result moving the direction of profitability. The algorithm then established the parameters with the most profitable settings.
Forex Traders can now experience machine learning algorithms with a new cloud-based analytical software “TRAIDE®”. Traders select the indicators for their strategy and TRAIDE® uses machine-learning algorithms to analyze them. Traders can then generate the code for a fully automated strategy to trade on their own platform.
Trading Forex and Derivatives carries a high level of risk, including the risk of losing substantially more than your initial investment. Also, you do not own or have any rights to the underlying assets. The effect of leverage is that both gains and losses are magnified. You should only trade if you can afford to carry these risks. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary