Automated foreign exchange software, or forex, analyzes foreign exchange market activity, such as currency price charts, explains Investopedia. It then alerts the user to potentially profitable pair trades by identifying spread discrepancies, price trends and any news events that may affect the market. The user makes necessary trade decisions based on the results, after which the software automatically make the trade.
Specific features are dependent upon the software developer or manufacturer, but the better products trade the leading currency pairs, such as the U.S. dollar and the euro, the U.S. dollar and the Swiss franc, the U.S. dollar and the British pound, and the U.S. dollar and the Japanese yen, or those pairs providing the most liquidity and the highest volume, notes Investopedia. The ability to adjust the trading from conservative to risky is a feature that most traders find desirable, as these parameters may fluctuate depending on current market values.
One of the most important features to look for is the amount of technical support provided by the vendor, both in initial setup and in subsequent problems or questions down the road. Some developers provide online instructions, while others provide 24/7 service, as well as trial versions of the software. Even the most experienced trader may be a novice in the field of computer software, so ignoring this area may be detrimental to long term goals, according to Investopedia.