Stock Futures Market

28Jan

How are automated trading systems beneficial for traders?

A Blue Sales Stock Market Analysis Illustration

A Blue Sales Stock Market Analysis Illustration

Automated trading systems facilitate traders to execute their trade orders via computer automatically. They just need to establish certain rules for both entry and exit entries. Once programmed then trade orders will be automatically executed. These automated trading systems are sometimes also referred as algorithmic trading. The rules of entry and exit can be simple conditions or complicated strategy sometimes depending upon the requirement of a trader. One of the biggest advantages of using automated trading system is that the role of emotions is completely eliminated as trade orders are automatically placed once the required set of conditions are met.All the executed orders will be reflected in Demat account. Traders can take suggestions from market experts on Stocks Tips and consider them while giving instructions to their system for better results.
Once a rule is successfully designed, the computer will monitor the market and look for buy or sell opportunities as indicated by the trading strategy. Most recognized benefits of the automated trading system are discussed as follows:
1)Easily back test the results
Using historic data a trader can check the viability of a trading strategy which he is using before applying it live. When an automated trading system is designed all rules are to be explicitly mentioned. There is no room for assumptions and interpretations. Traders can apply their strategy on historic data and understand its results without actually risking their money in the market.
2)Reduce the effect of emotions
Since trading strategy is pre-decided once the specifications are met trade order is automatically executed by the computer. Therefore traders will not further hesitate or doubt on their strategy.
3)Disciplined trading process
At the beginning itself, trade rules are established and based on those rules trade order is automatically executed. When the market is volatile, then also a trader can perform a disciplined trading with an automated trading system . Often due to impatience, fear, assumptions discipline is lost. Also, pilot errors are eradicated.
4)Reduce the amount of time to be devoted to trading
Often there are traders who are willing to trade but do not have sufficient time for it. The automated trading system can be a great advantage to them. As with this, there is no more need to sit and monitor market. All you need to do is give system all the required details and accordingly your orders will be placed in the market.
5)Overcome the challenges raised by different market conditions
Some traders fail or face difficulty to decide when to pull the trigger. They can successfully trade in the market overcoming this barrier with the help of automated trading system.
With above-mentioned advantages, an automated trading system has some disadvantages as well like mechanical failure, over optimization by traders while back testing. Depending upon their requirements a trader can decide he should go for automated trading or not. As it has its own boons and banes. Using smart trading practices are beneficial. Financial advisors like Epic Research offers services like stock market trading tips which are helpful in managing risk and returns.
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