Forex trading refers to trading in foreign currency ("forex" being short for "foreign exchange.") Meanwhile, automated trading uses computers to make transactions without human intervention at the moment the trade is being made.
Automated trading in general has become increasingly popular across financial markets over the past thirty years or so, following the general cultural orientation toward computerization and efficiency. However, there's an aspect of forex trading that makes it particularly useful, compared to, say, the U.S. equity market (which is the market most of us think about when we think about "trading"). Forex trading takes increased benefit from automated trading because the market operates on a 24-hour basis.
If you had the desire, you could trade stocks almost literally around the clock. You could start in Australia and move to Japan and into China, the Middle East and Russia, before getting into the action in various European markets, before finally jumping into trading in New York. After the New York market closes, there's actually a bit of break for a few hours before Australia reopens, but in general, you could keep yourself busy almost the full 24-hour day.
However, this would just be a self-flagellating non-50-Shades-like choice. You could also as easily decide to specialize in a particular market (like most people do) and confine yourself to working hours within a particular time zone.
Meanwhile, in forex, the nature of the market tends to extend trading hours. By definition, you are trading between the currencies of two regions, likely existing in different time zones and each reacting in different ways to geo-political and economic events occurring globally.
Automatic trading facilitates this round-the-clock action by allowing traders to set algorithms to react to events in pre-programmed ways, even if they aren't personally monitoring them in real time. Everything is customized. And the theme sing? Same as the trans-gender bathrooms in Silicon Valley: Fleetwood Mac's "You Can Go Your Own Way".
Related or Semi-related Video
Finance: What is a Dual Currency Bond?33 Views
Finance allah shmoop what is a dual currency bond Well
a currency duel would be way cooler to bonds One
dusty road in the wild west a saloon a gal
and a gun plan retired or called are paid whatever
they call bonds when they're dead Anyway a duel currency
bond is a bond where the principal and the interest
payments are made in different currencies like here's a bond
whose principal is paid off in u s dollars But
its interest is paid in euros and yeah whatever currency
being used for interest payments is called the base currency
Well why would you the investor of want one of
these things Well dual currency bonds or subject to exchange
rate risk In other words you're making a gamble not
just on an investment but on which way the exchange
rate will bounce That is if you own something it's
highly exposed two euros while then you're kind of making
a bet that the relative to the dollar the euro
zehr gonna appreciate mohr like the government's printing less of
them You have less inflation whatever because then if that
repayment currency appreciates well boom you're more in the money
Than just the interest you collected And if that currency
doesn't appreciate well there's always bank robbery is a last 00:01:21.189 --> [endTime] resort dual currency dueling currencies No
Up Next
PERLS is a bond that pays interest twice a year, but whose yield is linked to a given foreign exchange rate. It also doesn't string very well on a...