Making Data-driven Decisions in Forex Trading

Forex is one of the most volatile trading activities. Not only is there a wealth of traders but also many factors that can affect the prices of the currency pairs in milliseconds.

For this reason, a myriad of traders makes losses from the venture. The solution is to rethink making better decisions through big data.

The article takes you through the process of data mining, why, and how you can apply it in your day or long-term forex trading. 

After reading this article, you should find it easier to minimise losses, trade conveniently as well as propel your return on investment. What is more? Let’s take a deep dive below.

What Is a Data-driven Decision in Forex Trading? 

Simply put, data-driven decision entails using algorithms to ease trading. 

Given that forex trading is a highly volatile investment, you should conduct various forms of analysis. The first analysis is technical analysis.

Here, you determine when prices of currency pairs will change. To do this, you analyse past data and make assumptions on future price changes. 

The second analysis to undertake is fundamental analysis. You determine why price changes. Basically, price dynamisms root back to political, economic, and social factors. The last analysis is to determine the general attitude of other traders.

Combining the three analysis makes you a better trade. However, the catch comes when you can’t be everywhere at the same time, listening, seeing, and recording everything that may alter the price of your currency pairs. And this is where data mining comes in. 

Using complex algorithms, programmers can create software that collects what consumers do. It sends the raw data to a database for analysis. From the information derived in the stored data, it is easy to narrow down to a factor causing price change and when it occurs.

Why Is Using Software Important in Forex Trading

Now that you have got a program that analyses charts and other market factors for you, let’s see how this is relevant to your trading.

Whether you are a day or long-term trading, the software boosts your profit margins. It achieves the mission in the following ways.

The first importance of utilising the power of data-driven decisions is the accuracy of trading.

You don’t have to trade on luck. Since the data collected from various sources are readily available, you have the market forces at the fingertips. You reduce the possibility of encountering errors.

Faster data collection enables you to sell or buy per a slight price change. Before the data becomes outdated, the software has analysed it and presented the best results.

The continuous data absorption and information output speed up the trading. You can grab an opportunity faster and burst your profit levels as a day trader.

Even as a long-term trader, you will know when to finance the project or reinvest the revenues. Lastly, the process is efficient. 

How Do You Apply the Software in Forex Trading?

Having discussed the role of big data in your forex analysis, let’s have a look at its other crucial usage


If you want to see if the technology you plan to use is relevant to forex trading, expose it to past data. Let it analyse the ocean of information and predict the future. Then, determine if the new technology is relevant to boost the present trading methods. 

Automate Stop-loss and Take-profit  

The big data available on a world-class trading platform, like metatrader 4, enables you to automate processes such as stop-loss order or take-profit limits.

Under both criteria, you direct the trading software to halt your portfolio activities before losing or after winning respectively beyond a certain price level. Apart from easing your trading activities, you can keep your portfolio in the winning mark.

Buy or Sell

The vast information lets you determine when to invest more or reap the earned profits. All thanks to big data!


Applying Data-driven techniques is the gateway to winning from forex trading.