It is generally accepted that a computer program for trading Foreign Exchange (Forex) cannot be allowed to run unsupervised, as a so-called “Black Box” system, in the expectation that it will make consistent profits in this way. Such systems have often been advertised in the past, and have even shown success for a period after they have been let loose on the market. But they always come to grief, and when that happens the total loss of one’s account is not at all out of the question.
Automatic versus systematic
The reason for this is the complexity of the markets. The former chairman of the US Federal Reserve, Ben Bernanke, made exactly the same point in relation to central banking. He said that the management of the national economy cannot be automated – it is too complex to expect that a robot would ever be able for the task. However, at the same time he also said that national economic management should be systematic.
So what is the difference between automatic and systematic? We believe it is a question of degree, but that is no trivial matter. Systematic operation is automation raised to an enormous power. Perhaps our automated systems have the capacity to reach that level of sophistication at some time in the future, but we have a way to go. In the meantime, for Forex trading, we bridge the gap by making sure that a human is on hand to monitor and manage the operation of the algorithms. The automation then becomes a very powerful tool. Just as power tools enhanced the productivity and accuracy of carpentry, so our algorithms give a significant edge to our Forex trading.