The Benefits of Using an Automated Trading System

Also known as mechanical trading systems, automated trading systems allow traders to establish rules for market entries and exits that once programmed, are automatically executed via a computer. Automated trading allows for rules that are based on simple conditions such as a moving average crossover, or they can be used to set up complicated strategies which require extensive programming knowledge or even the help of a professional programmer. Automated trading systems will typically require the use of software which is linked to a direct access broker and any specific rules will need to be written in the language specific to that platform. Read on to learn more about the advantages of using an automated trading system.

Keeping Emotions in Check

Many Forex traders, especially those who are new to the market, find that their emotions can often get the better of them when making a trade. By using a Forex automated trading system, you can help to keep your emotions to a minimum during the trading process, allowing you to make trades that are smarter and more fact-driven rather than those that are made on the basis of how you feel. Since the trade orders will be automatically executed once the rules have been met, there is no chance for a trader to hesitate or question the trade.

Better Consistency

Planning the trade and trading the plan can be one of the biggest challenges on the Forex market. Even if a trading plan has huge profit potential, traders can still alter any expectancy that the system would have had by ignoring or bending the rules. Although there is no such thing as a trading plan which wins 100% of the time, traders who get fed up of losing can make mistakes such as skipping trades which could have been winners, therefore destroying the system’s expectancy. By using an automated trading system, you can achieve consistency with your trades and always trade the plan, putting you in a better position for success.

Order Entry Speed

Getting in or out of a trade a few seconds earlier can often make a huge difference when it comes to the final outcome. Since computers are able to respond immediately to any change in market conditions, an automated trading system can generate an order the exact second that trading criteria are met. As soon as a position is entered, all other orders will be automatically generated, including profit targets and protective stop losses. Since markets can often move quickly, traders who trade manually can often find themselves in a demoralising position if a trade reaches the profit target or blows past a stop loss level before the orders have even been entered. Using an automated trading system can prevent this from happening, helping traders get the most from the market.

Automated trading systems are excellent tools which can help traders to make the most from their investments. Using an automated system also means there is less work for a trader to do, opening up the opportunity to trade successfully across multiple platforms or markets.