Vicente Izquierdo Munoz - On the Role of Algorithms in Forex Trading
MONTE CARLO, MONACO / ACCESSWIRE / December 6, 2017 / Nearly thirty years ago, the foreign exchange market (Forex) was characterized by trades conducted via telephone, institutional investors, opaque price information, and low market concentration. Today, technological enhancements have transformed the sector. Actions are primarily executed via computers, real-time streaming prices have led to greater transparency, and the distinction between dealers and their most sophisticated customers has largely disappeared. Vicente Izquierdo Munoz discusses one particular change, the introduction of algorithmic trading, which has made significant improvements to the functions of the Forex market.
Munoz began by explaining that Forex is the virtual place in which currency pairs are exchanged in varying volumes according to quoted prices. Operating 24 hours a day, five days a week, it is the world's largest and most liquid financial market. Per the Bank for International Settlements (BIS), the daily global average volume of trading is 2.0 trillion USD. The bulk of actions are done for U.S. dollars, euros and Japanese yen and involve a large range of players, including private businesses, central banks, pension funds, institutional investors, large corporations, financial companies and retail traders. Their activities affect real exchange rates and can therefore profoundly alter the output, employment, inflation and capital flows of any particular nation. For this reason, policymakers, the public and the media all have a vested interest in the happenings of the Forex market.
Algorithms, essentially a set of specific rules designed to complete a clearly defined task, significantly reduce the risk traders are exposed to, said Vicente Izquierdo Munoz. Computers carry out user-defined orders characterized by a set of parameters such as timing, price or quantity that structure the trades that will be made. In Forex markets, much of the technology's growth in popularity has been due to the automation of certain processes that reduce the hours needed to conduct transactions. By automatically executing orders based on predetermined criteria, efficiency is drastically increased, leading to lower costs in carrying out processes. Banks have also taken advantage, using algorithms to update prices of currency pairs on electronic trading platforms. These programs allow institutions to increase the speed at which they can quote market prices while simultaneously reducing the number of manual working hours it takes to do so. In speculative trading, algorithms have been increasingly used to interpret data and allow traders to exploit opportunities arising from small price deviations. All of these advantages have led to the increased use of algorithms in the Forex market.
Vicente Izquierdo Munoz is an internationally recognized broker and founder of a leading firm that provides contracts for differences (CFDs) on stocks, commodities and indices. With industry experience of more than 17 years, Munoz built a company that offers ten platforms with more than 200 financial instruments to trade, and serves retail and institutional clients in over 180 countries in Europe, Asia, the Middle East, Africa and Latin America.
Vicente Izquierdo Munoz - Co-Founder of a Leading Brokerage of CFDs: http://vicenteizquierdomunoznews.com
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SOURCE: Vicente Izquierdo Munoz