Читать книгу Currency Trading For Dummies - Kathleen Brooks - Страница 63

Many leveraged funds have opted for a quantitative approach to trading financial markets. A quantitative approach is one that uses mathematical formulas and models to come up with buy and sell decisions. The black box refers to the proprietary quantitative formula used to generate the trading decisions. Data goes in, trading signals come out, and what’s inside the black box, no one knows. Black box funds are also referred to as models or system-based funds.

Some models are based on complex statistical relationships between various currencies, commodities, and fixed income securities. Others are based on macroeconomic data, such as relative growth rates, inflation rates, and geopolitical risks. Still others are based on technical indicators and price studies of the underlying currency pair. These are frequently referred to as rules-based trading systems, because the system employs defined rules to enter and exit trades.

If you’re technically or statistically inclined, you can create your own model or rules-based trading system. Many online trading platforms offer application programming interface (API) access to their trading platforms, allowing you to draw price data from the platform, filter it through your trading system, and generate trading signals. Some even allow for automated trade execution without any further user action. Check with your online currency brokerage firm to see whether it has an API and supports automated trade executions.

These days there are also ready-made automated trading systems available, called expert advisors (EAs). Most currency brokers offer these to retail clients. If you’re happy to let someone else create a trading program, this could make your life easier, but all automated programs come with their own level of risk that you should be aware of.