What are automated forex systems or robots, and how do they compare to managed forex accounts?
Automated systems generate orders in a customer’s self-directed account based on pre-defined rules or algorithms. They attempt to profit from market inefficiencies found via backtesting and other methods. Automated systems are subject to the risk of curve-fitting that results from developing a strategy for live trading solely based on historical price data. Since markets are constantly changing and old inefficiencies rapidly disappearing, automated systems risk failure if they are not regularly updated to match current market conditions. With managed accounts, the investor gives Power of Attorney over to a professional money manager and does not maintain a self-directed account as with automated systems. This gives full discretion to the manager, who typically relies on a combination of inputs including historical price action, algorithms, position sizing rules, news releases, and economic data to make trading decisions. While human involvement opens up the possibility of errors in jud
