Automated Trading System
What exactly are its advantages and disadvantages.
You might have perhaps stumbled upon a term automated trading system (ATS), sometimes referred to as mechanical trading system or statistical trading system.
Those that trade realize that what quite often jeopardises the success is their emotions and thoughts. The things they typically want is to keep the emotions from their trading however that is tougher than it appears. This is exactly why ATS comes into the picture.
ATS allows potential traders to establish exact principles for trade entries and trade exits and those guidelines are executed via laptop or computer immediately. The guidelines can be as simple as a crossover of moving averages. They may often be really advanced, but that’s when a coder has to step in in case the trader is not accustomed to computer programming.
Traders often place their entry, exit and money management principles in automated trading system that tell computer to execute and keep an eye on their positions. One of the greatest benefits of automated trading software is that it can take most of the emotions and thoughts from trading simply because trades are automatically executed as soon as requirements are fulfilled.
Benefits of ATS
It eliminates emotions. It assists traders to maintain their emotions and thoughts under control therefore it means they have got little difficulty sticking with their trading plan. Hesitating or questioning the trade dissapears.
Given that traders can easily program their software to buy and sell for them, they can also run a quick backtest of their guidelines.
All traders know the saying “plan the trade, trade the plan”. This is exactly what ATS is able to do for them. It trades even in their sleep.
Programmed Trading Systems have few disadvantages.
You need to realize Automated Trading System is still a software therefore it may at times fail you. In the worst situation, it can result in a massive loss if it fails to close a trade. That is why you can not just leave your laptop or computer on and leave for a couple of weeks. You will never know what might fail.
Trading software itself
It may sound mad, but the trading software program is a drawback by itself. The actual cause of that is that many traders optimize it, tune it, fool around with it to try to get the best results which unfortunately leads to over-optimization. This only produces a trading plan that is difficult to rely on in live trading.
Computerized trading software is an excellent way to go, but it does require control. So if you have difficulty managing your emotions when trading, then automatic trading software program could be the alternative.
Automated trading software is not just applied to forex market trading. It can be used in several other markets too. Plenty of giant organizations use semi-automatic or fully automatic software because they can not simply depend on a single currency trader to do all the trading.
If you ever find software that guarantees high returns, don’t purchase it. Make sure you go with the one you’ll be able to program all by yourself.