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Last Updated: Sep 2009
Last Updated: Sep 2009
Automated trading systems have several benefits, but they also have their downsides. After all, if someone had a trading system that automatically made money all the time, he or she would literally own a money making machine!
Advantages:
- An automated system takes the emotion and busy-work out of trading, which allows you to focus on improving your strategy and money management rules.
- Once a profitable system is developed, it requires no work on your part until it breaks, or market conditions demand a change.
Disadvantages:
- If the system is not properly coded and tested, large losses can occur very quickly.
- Sometimes it is impossible to put certain rules into code, which makes it difficult to develop an automated trading system.
Advantages:
- An automated system takes the emotion and busy-work out of trading, which allows you to focus on improving your strategy and money management rules.
- Once a profitable system is developed, it requires no work on your part until it breaks, or market conditions demand a change.
Disadvantages:
- If the system is not properly coded and tested, large losses can occur very quickly.
- Sometimes it is impossible to put certain rules into code, which makes it difficult to develop an automated trading system.
Trading systems are simply sets of rules that traders use to determine their entries and exits from a position. Developing and using trading systems can help traders attain consistent returns while limiting risk. In an ideal situation, traders should feel like robots, executing trades systematically and without emotion.
Automated trading systems are created by converting your trading system's rules into code that your computer can understand. Your computer then runs those rules through your trading software, which looks for trades that adhere to your rules. Finally, the trades are automatically placed with your broker.
There are many trading programs that support automated trading systems. Some will automatically generate and place trades with your broker. Others will automatically find trades that fit your criteria, but require that you place the orders with your broker manually. Moreover, fully automatic trading programs often require that you use specific brokerages that support such features; you may also have to complete an additional authorization form.
Automated trading systems are created by converting your trading system's rules into code that your computer can understand. Your computer then runs those rules through your trading software, which looks for trades that adhere to your rules. Finally, the trades are automatically placed with your broker.
There are many trading programs that support automated trading systems. Some will automatically generate and place trades with your broker. Others will automatically find trades that fit your criteria, but require that you place the orders with your broker manually. Moreover, fully automatic trading programs often require that you use specific brokerages that support such features; you may also have to complete an additional authorization form.
