Identifying Challenges Faced by Foreign Exchange Robots Designers

Abstract

The international currency market Forex, provides interesting opportunities in terms of wealth. Open twenty four hours a day and five days a week, the market provides a large number of currency pairs to trade. The capacity of manual Forex trader decreases in terms of decision making, depending on time spent in front of the computer, when monitoring the market for catching trading opportunities. It is also impossible to monitor more than two currency pairs. These are two of many other challenges faced by manual Forex traders. The automation solve these kind of problems and many more. However, to trade the market is complex and challenging to be automated. Therefore, this thesis aims to investigate ways of designing efficient Forex trading robots by identifying the challenges faced by designers and finding possible solutions to overcome the identified challenges. In addition to a related work literature, this qualitative study used interviews with professionals in the fields of economy, applied mathematics to economy, computer science and users. The results of this thesis identified Forex strategy related challenges and robot environment related challenges. In the first category, coming up with profitable trading system, forecasting the Forex market and switching between different strategies are the major identified challenges. In the second category, broker behavior control, the stability of the system and time constraints are the identified challenges. In robots using fundamental analysis, the suggested solution to forecast the Forex market is based on linear optimization and forecasting, combined with genetic algorithms while robots using technical analysis, the optimization of combined indicators is encouraged to be followed, for better design. Testing a trading system in available Forex platform simulators using historical data give reliability on the trading system's expected results. The identified challenges will help software engineers as guideline to design a more efficient Forex trading robot. Key Words - Challenges, Automated, Foreign Exchange, Forex,