Types Of Algorithmic Forex Strategies

Have you ever tried a Forex automated trading system such as CarbonFX ? These trading systems can be helpful to those traders who wish to eliminate interference of human emotions when it comes to taking some business related decisions. You can execute buying or selling on these platforms. But before getting started, try to understand the various algorithmic Forex strategies available in the market. These strategies can be mixed and matched which can yield many combinations:

  • First strategy is to follow the market trends. It is the simplest way to deal with selling or buying orders which are generated on the basis of conditions given by the technical indicators. Both the historical as well as current data can be compared to predict if the trends are going to reverse or continue.
  • Second strategy that can be used is the mean reversion system. Its operation depends on assumptions that 80 percent of the time markets are ranging. This strategy allows calculation of an average asset price with the help of historical data but trading is done by hoping that current price will return to the average price.
  • Third strategy is the news based. A news based algorithmic trading system generated trade signals automatically by hooking to news wires. It depends on how the actual data turned out when compared to the previous data or to the market consensus.
  • Market sentiment is another Forex algorithmic strategy that involves a system for detecting extreme long positions or net short. It can also involve scanning of social media networks for gauging currency biases.
  • Using arbitrage in trading strategies may sound complicated but it will allow the system to hunt for price imbalances in various markets and try to earn profits off those. If you want to make good profit then large positions need to be traded. Triangular arbitrage is also a popular strategy involving two currency pairs and a currency cross among these.
  • High frequency trading system involves operating at lightning fast speeds, executes sell and buy signals and closes trades within milliseconds. It uses scalping or arbitrage strategy depending on the fluctuations of prices and also high trading volumes are involved.

“Iceberging” is a strategy preferred by organizations that do not reveal their Forex positions. So, basically they do not place their trade with only a single broker. Rather they split their trade into number of positions for executing under multiple brokers. This helps a business to execute trades without worrying about price fluctuations.