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The Top Advantages of Automated Trading

Technology has made a lot of changes in many aspects our lives.  Among the most affected aspects is the financial industry. Technology has revolutionized the way Traders Joint Account and investors make their trades and investments.  And with the speeding change brought by technology comes automated trading.

Automated trading is the use of computer and internet technology to place and manage individual trades within the online marketplace.  This quality of automated trading makes it possible for traders to implement their trading plans for quickly. It saves time and it saves energy.

In this article we are going to talk about the advantages of automated trading.  Read on!

Trade Management

Automated trading resolves the problems in different areas in trading.  It also improves the quality of such trading areas.

Consider the trade’s entry.  At present, order execution times are gauged in milliseconds, with the actual profit or loss often realized in quick seconds.   Automated trading makes it possible to provide instant order entry upon a trade setup’s identification.

Another element is real-time trade management.  Automated trading lets you instantly place a profit target and stop loss order right off the acceptance of the order into the marketplace.  Different trading platforms can be programmed to execute complex stop loss and profit target strategies.

Human Errors are no Longer a Problem

When you interact with the market, several challenges take place and a huge part of those challenges are linked to “human error.”  Even if you think you have already developed a successful trading system that is based upon discretion, the trader’s execution of the system can encounter unforeseen errors at any given time.

Extended drawdowns or prolonged success can easily affect your confidence and cloud your judgment.  Using automated trading systems can get rid of human emotion from executing trades based upon irrational decision making.

Automated trading offers you the ability to execute your trading plan without precision and consistency.  The automated system acts on behalf of the trader without any emotion and without using any kind of human discretion.

A trade setup is defined, the trades are placed accordingly on the market, and a profit (or a loss) is realized.  Since the automated system executes trades in a consistent manner, it ensures that the integrity of the system in not compromised.

Quantifiable Edges

At present, the electronic trading platforms that are available to the retail trader contain robust functions when it comes to historical data research and automated system development.  You can try optimization, walk forward analysis, and backtesting to put this evolving computing technology to use in order to develop a quantifiable “edge” within the marketplace.

Backtesting is one of the most popular method by which you can develop a “statistical edge.”  It refers to the process of applying the trading system to an older set of market data in order to measure its relevance.

The statistical results of backtesting can be very useful for the optimization of a portfolio.  With the implementation of automated backtesting, the individual trade success rates, Trading Account Types performance, and risk-reward ratios can be thoroughly examined.  

Therefore, the ability to execute in-depth market research in so quick a time and so cost-effectively  is one of the biggest advantages brought about by automated trading.