What is automated trading?
Automated trading is based on a computer software program that automatically carries out trades on behalf of a merchant aligned with the individual's parameters. Large institutional traders, including Hedge funds, rely on automation for most of their trading. Automated trading has an algorithm that is created on the basis of criteria adapted by the user and trades accordingly. It can be used on multiple assets, including shares, options, futures contracts and foreign exchange products.
Merchants relying on automation must determine the limits and opportunities that the program should respond to. Parameters include input and output points, profit goals, technical indicators, price patterns and more. These conditions serve as a computer instructions to determine the exact points of input and output to and out of the market. It works for a merchant, even if he does not follow the markets. Automated business program can work around hours. This allows OBA pavement based in the US, which wants to trade in European securities that are traded with a five -hour difference, leave the computer and relax. Automated stores are also performed much faster than possible.
One of the pitfalls of human trading is the tendency to be emotional. When traders allow emotions to interfere or sell, they can leave the trade too early for fear or stay in a position too long for greed or euphoria. Automated trading eliminates the threat of trading based on feelings.
Investors may not develop their own systems and strategies for automated trading. Sellers sell complete trading systems and signals that the user can integrate into their own program. The most respected notes will make unrealistic investors' demands, such as promising revenues of 1,000% per year. ToEven after the purchase of the trading system, the markets must be aware of the markets so that potential errors that may occur.
automation is also associated with some risks. Computer programs cannot replace human judgment. Traders may want to consider using automated trading only on more routine business tasks than to rely on the system to make 100% purchase and sale of orders. It may take time to evolve and prove the trading system that works, but by practicing and testing business strategies, investors can increase the chances of success.