The other day, I received a request from someone who wanted me to put a link or ad on my website for a commercial robot. I was not interested, and I will tell you why.
Forex Market: Robots vs. Humans
Who makes the market move in a particular direction? Humans or computers (bios)?
The foreign exchange market moves trillions of dollars into the currency every day. There are millions of traders whose accounts range from a few dollars to hundreds of millions each, and some of them allow the trading robot to trade them.
While I have not been able to find any reliable statistics on the internet about the percentage of traders who use trading robots to make decisions about them, I do estimate that it is possibly less than 50%. The rest 50% of Forex traders use some type of trading software to help them make decisions, but it is they (humans) who make the final decisions, not the machine.
Artificial intelligence or artificial intelligence has made rapid improvements in the past ten years, and progress comes quickly. The most sophisticated artificial intelligence systems can learn at the child's level and adapt to environmental change. These types of systems are designed to trade at all levels and achieve moderate success.
When domain tips
As neural networks and algorithms get more sophisticated, I think more and more people will choose to use commercial robots to do thinking for them. But I do believe that for robots to have a huge impact on the Forex market, there must be more than 50% of the total volume of currencies that are executed by smart robots without human intervention. I don't think at this point in time (2014) that robots dominate the foreign exchange market, but they are increasingly being used. A recent article I read in one of the major financial news outlets stated that the use of automated trading systems by large banks is around 65%. The reason for this is to limit the illegal activities of internal merchants who manipulate prices. If this is true, we have a situation where prices can fluctuate significantly, without cause or without reason, and human emotions are not a very important factor. On the contrary, if we know that most algorithms are used by large banks, we can better predict price movements.
If a greater percentage of the global currency is traded by robots, then there could be a more reliable way to trade using robotic systems. It is interesting to note that all computer algorithms or operating agencies (expert advisors) that are used by the banking system have been programmed using trading patterns for professional human traders. The main difference between a human trader and a computer program is that it cannot reprogram itself to adapt to changing market conditions. Current supercomputers and more sophisticated neural networks cannot simulate. Biological systems do not show emotion and this is where the device fails miserably. Non-biological computers cannot feel the euphoria of a lucrative business, nor can they feel the pain of margin call. They cannot feel fear or rush to greed, and therefore their actions do not take these emotions into account; they cannot predict these emotional responses with 100% accuracy. Although the largest percentage of trading is done with these Forex robots, professional traders still control and often go out or trade manually if they see the Forex system do something they do not want to do.
That is why I am not using Forex robots, software or algorithms to help me with my trading. Instead, I take a discretionary biological, technical, and irrational approach to trading based on looking at data analytics, emotion and other factors, and putting them in my biological mind in order to make Educated guess.