Weighing The Pros And Cons Of Automated Trading Systems To Script Success

Author: Algomaker India

You also refer to automated trading systems as mechanical trading mechanisms, system trading, automated trading, or algorithmic trading. This system enables traders to propound specific regulations. You can establish them for trade entries and business exits.

  • After programing the rules, you can automatically execute them through a computer.
  • Numerous trading platforms show a 70%-80% increase in share trading on US stocks through automated trading systems.
  • Investors and traders can transform precise and late entry and exit into automated trading systems. They can also include money management protocols in the same system.
  • You can monitor the concerned trades through your computers.

Entering and exiting trade with automated trading

Strategy automation creates such a hullabaloo because it can absorb some of emotion or zest out of trading. Reason being, you automatically place trades after meeting certain criteria.

  • You can form the entry and exit rules of trade on the basis of a few simple aspects. It could be an average moving crossover.
  • It can be complex strategies that call for a comprehensive understanding the intricate programming language of automated trading.
  • The language is specific to the trading platform of the user. You can also base them according to the expertise and bandwidth of an experienced programmer.

The requisites of automated trading systems

They typically require software, which you connect to a dedicated direct access channel or broker.

  • You need to write any specific regulations in the proprietary language of that particular platform.
  • For example, The Trade station integrates the Easy Language for programming. You also have the Ninja Trader, which uses the Ninja Script.

Establishing trading regulations

Some trading mediums entail technical wizards to build strategies. They help you select from a list of technical indicators for building a cluster of rules that safeguard automated trading.

  • As a user, you can establish that a long-term trade will enter the calendar after the moving average of 50-days exceeds the 200-day average.
  • Show this on a 5-minutes chart of a specific trading instrument. You can showcase the order type to show the right time to trigger the trade.

Advantages of automated trading

With auto trading systems, you can minimize emotions and negative attitude throughout the trading phase.

  • By checkmating your emotions, you can obviously have more bandwidth to stick to your trading plan.
  • Since the system automatically executes trade orders, you won’t question or hesitate to allow the trade.
  • Apart from helping traders who are apprehensive of pulling the commercial trigger or switch, automated trading can prevent overtrading too. It stops impulsive traders from purchasing and selling at every scope.
  • In addition to promoting and preserving discipline, automated trading also enhances the speed of order entry.
  • Since computers have an immediate response window to evolving market conditions, the advanced system can generate orders right after you meet the trading criteria.
  • It diversifies trading to a huge extent. Automated trading systems permit you to trade various accounts or multiple strategies simultaneously.

The downside

Mechanical failures are integral to automated trading. That’s a fact. Monitoring is also an issue system crashes, power losses, or connectivity problems can cripple the entire process.