With an automated trading system, you can define specific rules for trade entries and exits that can be automatically executed by a computer. Once the rules have been established and programmed (by you or a qualified programmer), the computer can monitor the markets to find buy or sell opportunities based on the trading strategy specifications. Depending on the specific rules, as soon as a trade is entered, any orders for protective stop losses, trailing stops and profit targets will automatically be generated. In fast moving markets, this immediate order entry can mean the difference between a winning and losing trade.
In today’s times, the major institutions are mostly using automated trading systems. As you can read in this interesting article.
Traders and investors can turn precise entry, exit and money management rules into automated trading systems that allow computers to execute and monitor the trades. One of the biggest attractions of strategy automation is that it can take some of the emotion out of trading since trades are automatically placed once certain criteria are met. This article will introduce readers to and explain some of the advantages and disadvantages, as well as the realities, of automated trading systems.
There is a large misconception that robots somehow make the market ‘unfair’. This is usually from people who are not finding success (and that represents 98% of the people who try to trade) in the market. Regular retail traders/investors like many of us have access to some similar automated trading that institutions have. If HFT (high frequency trading/traders)/Robots are what institutions and normal people are using, then people will adapt. We must realize that opportunity.
Add this to the possibility of forming teams being able to acquire the best systems and organize their agenda for continuous learning and invest better in manual and automated trading. This is the most important HUMAN part of the business that we can put on the desk, that machines can NOT.
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