Auto trading, otherwise known as automated trading, algorithmic trading, or mechanical trading, allows traders to program specific rules into the trading platform through a computer. Entry and exit rules can be formulated according to simple conditions or complex strategies. The trading platform determines the type of programming language that can be incorporated into the automated trading system.
Typically, these trading systems must be linked to direct access brokers, or be compliant with the platform’s proprietary language. With automated trading systems, multiple technical indicators will be used to define both entry and exit points. Sometimes, these are constructed with “wizards” for commonly available indicators such as 50-day moving averages (MAs), 200-day MAs and the like. It should be remembered that technical indicators are a tool in developing trading strategies, but there is no blanket strategy that guarantees success in the financial markets.
What Are the Advantages of Auto Trading?
Auto trading features multiple benefits for clients. Foremost among them is the ability to trade multiple accounts simultaneously, and implement a myriad of strategies at the same time. By doing this, clients can diversify their risk across their portfolio, with multiple financial instruments. Without the use of computational software, investors would not be able to execute all these trades. Auto trading allows you to scan markets and generate orders, and monitor trading activity instantly. With auto trading, you can generate immediate responses to changing market conditions.
The enhanced order entry speed includes profit targets and protective stop-losses. Without auto trading functionality, it is possible to lose track of stop loss levels and profit target levels. The consistency that is possible with auto trading is one of its most endearing characteristics. You can stick to your trading plan, and all the rules that have been put in place. Other key areas in auto trading include back testing, discipline, consistency, and logic-based decision-making. By removing emotion from the equation, auto trading offers much higher success rates to traders.
What Are the Disadvantages of Auto Trading?
Any good system has its pros and cons. Much the same is true with auto trading. It is possible that traders who use back testing can generate systems that look good in theory, but don’t perform as well in practice. By over-optimizing, you can create a trading plan that lacks reliability under real-world conditions. Another issue that crops up from time to time is mechanical failure. Once again, the theory may be sound, but the implementation of it can be flawed. Nothing is 100% infallible, and constant updates, monitoring, and control measures may be required to prevent mechanical failures from occurring. All systems need to undergo the learning curve, and that much is true with automated trading systems too.
Introducing Auto Trading Options
Broadly speaking, automated trading systems, otherwise known as ATS, are computerized programs that allow the creation of orders on a trading platform. Multiple automated trading systems are available today, and many of these are offered on Mac, PC, tablet, phablet and smartphone devices. Automated trading systems run on complex algorithms, and they can be tailored according to buy/sell orders, technical specifications, and multiple strategies. Traders can use pre-built trading strategies with these automated trading platforms, or create their own. The dynamism of these platforms allows for testing of trading strategies in simulated environments. Once the trader is confident about the ATS, it is easy to switch over to a real-money trading platform.
With advanced automated platforms you can copy the trades of expert traders in real time, without having expert knowledge of trading fundamentals yourself. By employing auto trader functionality as part of your trading regimen. Simply register an account on one of the leading platform , add funds to the account and start trading. It’s easy to copy trades of professionals, use manual trading or automated trading, and even rank the best traders in the market. All automated trading systems and platforms need to be user-friendly, offer useful charts, data, educational resources and enhanced functionality.
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