Automated Trading Systems and Why You Should Use Them

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Automated trading systems are a part of the trading world now. And if you have no idea why, here are some of the biggest reasons LBLV Forex Broker Review why you should try an automated trading system today. Check them out!

Minimizes Emotions

Automated trading system minimizes emotions in the entire trading process. You better believe it. This is very helpful because by keeping your emotions in check, traders usually have an easier time sticking to the plan.

Since trader orders are executed automatically once the trade conditions have been met, traders will not be able to hesitate of question the trade.

Aside from helping traders go on with the plan, automated trading can also curb those who are apt to overtrade, which refers to the act of buying and selling at every perceived opportunity.

Encourages and Improves Discipline

Since the trade rules are established and trade execution is performed automatically, discipline is preserved even during a volatile time in the market.

Discipline is usually lost because of emotional factors such as fear of taking a loss or the desire to eke out a little more profit from a trade. Automated trade Charts and Analysis helps ensure that discipline is maintained because the trading plan will be followed exactly.

Additionally, “pilot error” will be decreased.

Backtesting Capabilities

Backtesting refers to the application of rules to historical or previous market data to determine the viability of the idea. When designing a system for automated trading, all rules must be absolute and not open for interpretation since a computer needs to be told exactly what to do.

Traders can take these precise sets of rules and test them on historical data before risking money in live trading. Careful backtesting enables traders to evaluate and calibrate a trading idea, and to determine the system’s expectancy, which refers to the average amount that you can expect to win or lose per unit of risk.

Consistency

One of the largest challenges in trading is to plan the trade and then trade the plan. Even if you trading plan has the potential to be profitable, traders who ignore the rules are altering any expectancy the system would have had.

Obviously, you really cannot find a trading plan that achieves 100 percent win rate. Losing is part of the game, as much as the end is part of the journey.

However, losses can be psychologically traumatizing, so when you have two or three losing trades in a row, you might decide to skip the next trade. If that next trade would have been a winner, you have already destroyed that expectancy your system has had.

Automated trading systems let traders achieve consistency by trading the plan.

Order Entry Speed

Because computers respond right away to changing market conditions, automated trading systems can generate orders as soon as the trade conditions have been made.

Getting out of the trade a few seconds earlier can make a big difference in the trade’s result. As soon as the position is entered, all other orders are automatically generated, including protective stop losses and profit targets.

Markets can move rapidly, and it is pretty demoralizing to have a trade reach the profit target or speed past a stop level before the orders can even be entered. An automated trading system prevents this from happening.

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