What is a Forex Trading System

In order to understand what a forex trading system is, it is necessary to understand exactly what a forex trading platform is and how it functions. By knowing this, the relevance of a forex trading system becomes far clearer. Generally known as the retail forex trading segment, this segment forms part of the huge foreign exchange market and this segment represents about 5% of the total forex market turnover which is daily estimated as being between $50 to $100 billion.

Today, the retail forex market is where exceptionally growth is being registered and one of the main reasons for this has been the continued development of tools. These are for traders that are aimed to make it easier for both front end users known as retail traders and for back end users who are known as retail brokers to do business. Forex trading has flourished; thanks to the migration away from paper based interbank trading to a completely new system of electronic trading. This migration has allowed the traders and brokers to break away from the physical constraints of being in the currency exchanges and to be able to work online from any location in the world.

This removal of the physical constraints has fueled the expansion but the effectiveness of forex trading is only as good as the trading applications available to retail traders and retail brokers. A successful forex trading system will need to be intuitive for both parties and as transactions need to take place in a very short time, it is vital for all parties to understand the instructions and are able act quickly.

Development of Forex Trading Systems
It is agreed that retail forex trading started in 1996 and the development was driven by a small numbers of brokers who wanted a trading system they could use but lacked the tools necessary to develop such a platform. This first generation forex trading system was custom built to cater for their needs but the economies of scale did not work for this group known as MG forex; simply the R&D costs just to keep the system functioning correctly outstripped the associated profit. However, useful lessons were learned and applied in the development of the next generation.

The second generation of forex trading systems attempted to improve the ability for retail traders and retail brokers to synchronize their activities efficiently. In this, the resulting forex trading systems were only partially successful. While experienced bank or portfolio managers may be able – given their extensive experience – to navigate the cumbersome programs and complicated trading routines, this was beyond most of the new retail traders and retail brokers. It was not helpful that most of these trading systems were designed without any reference to any standards and worse, the developers of these systems in many cases had no idea of exactly what the users were expecting to get from them.  To do the programmers justice, the development tools they had access to at that time were nothing like as powerful and optimized for setting up forex trading systems as those that started to become available in the last 2 years.

Advantages of the Latest Forex Trading Systems
Today, the forex trading systems available focus on making trading facilities easier and more effective for retail traders with extensive developments to the system GUI. At the same time, they offer retail brokers access to important information with better reporting and better control mechanisms.

As a collateral benefit, allowing users to be able to use the system more easily means that attention can be turned to other business areas. These include the possibility to offer individuals who have no experience of forex retail trading to join the market as retail traders and a large amount of internet advertising has been conducted globally to allow new retail traders to join the network. Having more time available for both retail traders and brokers, it is possible to turn attention to the forex trading applications often known as robots that automatically issue, buy or sell instructions based on relative currency values. These automated procedures allow for impersonal decisions to be made without human intervention of the risk of emotional decision making. However, it is strongly advised as a trader to continually review the robots to look to take underperforming parts of your system and give them a full makeover.

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