To those who have never done it, an automated system may appear to be an unknown term. So what is it exactly? Namely, it represents a method of participating in numerous financial markets by utilizing software that carries out predetermined rules for exiting and entering trades.
As a trader, you are going to mix through technical analysis with certain setting parameters precisely for your positions, for example, trailing stops, orders to open, and guaranteed stops. This type of trading allows you to execute a lot of trades in a short period of time, plus you will be able to take out your emotion during the decision-making process.
How come, you probably wonder? Well, it’s because all the rules of the trade are already embedded into the parameters you determine. So is there anything else you need to know about it? Sure there is. Just keep reading.
What Do You Need To Know About Automated Trading?
How Does It Work?
The first step that must be taken is to pick a platform and then to define the parameters of the trading strategy you’ll be employing. You should rely on your trading experience to define the set of rules and conditions.
Once you do it, then your custom algorithm is going to use the criteria to place these trades instead of you. Usually, these factors are based on the timing of your trade, as well as the price at which it is supposed to be closed and opened, along with the quantity.
To make things simpler – for instance, “acquire one hundred Apple shares when its fifty-day moving average goes well above the two hundred-day average”. Moreover, the automated trading strategy that has been determined is going to continuously supervise financial trading market prices, plus trades are going to be instantly carried out only if predetermined parameters are met.
What Are The Benefits Of Automated Trading?
Diversifies Trading
This type of trading allows people to diversify their trade by giving them the option to trade on more than one account. Plus, they will also have the opportunity to utilize more than one strategy at the same time. Namely, this ability allows you to decrease your risks, meaning that you do not sink all your cash into just one trading basket.
Additionally, an automated system can recognize brand-new trading possibilities across a huge market network, and also to create orders, and monitor the progress of trades.
Cover-More With Less Time
Those traders who are active, typically spend a lot of hours supervising positions, as well as market movements. During this process, they normally employ their knowledge and experience to utilize their strategies and methods which can oftentimes be extremely exhausting and time-consuming.
Now, with the Automated Trading System, the situation is a little bit different. Namely, you can create as many strategies as you wish, and it will get the job done. You will just have to supervise the algorithms to ensure they are working the way they’re supposed to.
Recognizes The Opportunities Fast
A trading program carries out trades in a split second and at the same time benefits from instant market movements. The speed of the computer is always used to supervise the markets and recognize the trading potentials based on coded rules and carry out based on precisely these rules in a blink of an eye.
Once the position is entered, all the other commands get immediately generated which involves the profit targets and losses. Now, the good thing about the trading program is that you will never run out of great trading opportunities.
Promotes Discipline
Trading on this type of system allows you to stay disciplined no matter what. Even traders and investors who have a lot of experience will tell you that at some point in their lives they were too hasty and were making quite impulsive and immature decisions.
Once that occurs, it means that the discipline is completely lost because traders have made their decisions based on their emotions, and that’s something that simply isn’t allowed in this industry.
Further, in ATS the rules are already being made and trades are carried out automatically. Now, even if a trading plan seems promising and like something that can potentially bring you lots of cash, you should still follow the rules, because if you don’t, it is going to subvert the expectancy the system already had.
It is easy to conclude, based on the facts we’ve provided you with, that an Automated Trading System is beneficial for every type of trader. You just have to follow any rules that are part of this process to succeed.
