Automated trading has completely changed the markets. By making traders much more equipped and significantly reducing the risks of trading the market, it is becoming increasingly popular every day.
There are several aspects that this system has changed Forex trading.
This is one of the most prominent and critical aspects of automated trading. Since computers are much faster in responding to immediate changes in the market, the orders are generated the moment the trade criteria are met. All traders know that a delay of a few seconds of your entry can make a massive difference in the outcome.
Markets keep changing quickly. Therefore, an automated system helps ensure that one doesn’t miss out on an opportunity to produce profits just because of logistical challenges.
An automated trading system offers an opportunity for traders to possess and trade using multiple accounts and strategies simultaneously. This revolutionary aspect assists in reducing one’s risk by dividing it over a range to form a hedge against losing positions.
The system is designed to scan for trading opportunities across a wide range of markets, monitor trades, and generate orders. It seems almost impossible to achieve this level of efficiency manually. Therefore, this has significantly helped in reducing the risk of traders and attracting more and more people to the market than ever.
Although discipline turns out to be an essential skill for trading, it’s often challenging to practice. In automated trading, since the rules are already established and the execution happens automatically, the discipline is preserved even in the most volatile of the market situations.
Most often, emotional factors like the desire to secure a little more profit or the fear to lose can lead to undisciplined actions. Thus, ATP has helped dramatically in ensuring disciplined decisions in trading.
Unlike manual trading, automated trading systems give you much more time off to focus on other related issues. This is because the trading strategies are predefined on the account, according to which the process keeps unfolding unless externally stopped.
Therefore, automated trading has made trade much more accessible and time efficient. One needs not to invest all their time for the purpose and can keep trading on the go. However, it also needs to be reminded that solely depending on the technology is also not a wise choice to make. One needs to monitor for any technical failures or system quirks.
This aspect is not just restricted to automated trading systems. Most of the traders who use back testing techniques create strategies that work incredibly great on paper, but the same effects do not get translated into a live market. Over-optimization simply means curve-fitting to the extent that it leads to producing unreliable trading plans.
Therefore, traders usually use automated trading platforms to create plans that should never experience a drawdown or have 100% profitable trades that fail miserably when run on the ground. However, this possibility is reduced highly in manual trading.