What Are An Automatic Trading System And Its Advantages?

The automatic trading system is also called as algorithmic trading or the mechanical trading system will allow the traders to establish certain rules for entries and exits. Once programmed can automatically be executed using the computer. It is found that around 75% of shares traded on the US stock exchanges arrives from the automatic trading system.

Advantages of the Automated Trading Systems 

The long list of the advantages includes since the computer monitor will make the process with high efficiency.

Diversifying Trading

With the help of the automated trading system, it is possible to trade with multiple users, multiple accounts with different strategies at the same time. In case of the manual process, there are risks in the potential to spread over various instruments when you are creating a hedge against some of your losing position. This can be easily handled if you are making use of the automated system since the computers will work on the milliseconds. Also, the process of scanning to look for the trading opportunities will be increased across the wide range of market, monitor trades and generating orders. 

Preserving Discipline

As the trade rules are established and the trade execution is carried out automatically, the discipline is preserved high in case of the automated system. Most of the times, discipline is lost when you respond to some of the emotional factors like fear of losing, or if you wish for little more profit, etc. The automated system will not know anything and it will just move on based on your trading planed programmed to it. Also, some pilot errors will be reduced. Pilot error is so tiny ones but cases huge change; for example, entering 1000 instead of 100 which is the great mistake.

One of the most faced challenges in the process of trading is to plan for trade and trade with the plan. Even if you have the most profitable trading plan, traders who ignore the rules of it will not be able to make a huge profit.

Low Rate of Errors

With the help of the automatic trading process, it is possible to keep the emotions balanced in the trading process. With the emotions check, the time required to stick to the plan will also be reduced. Also, as the trade is executed automatically, there are more chances for moving based on the rules. Humans are only prone to errors and the machines are not.

Back Testing

It applies the trading rules to the historical rules and helps in determining the viability of different ideas. In the automated system, the rules are absolutely without any interpretation. The computers will not make guesses; it will only do the things that are programmed to it. These precise set of rules will help in trading to test them on the historical data before risking money when implementing in the live trading.

Improving the Speed of the Order Entry

Computers are the machines that respond immediately to the changing conditions of the market. Moreover, an automated system will be able to generate more orders that are suitable for the trading criteria. In the case of trading, getting in or out apart from the specific time will lead to big differences in the outcome. If it is the machine in the automated process, all the works are processed automatically generated that includes profit, losses, and protective stops as soon as you enter into the algorithmic trading system.

Till now, there are to rules that will make you 100% win in all the trades. Loses are always in the part of the game but it would be psychologically traumatizing. Some traders lost in two or three trades will skip the fourth trade. It is all that you make efforts to bring the right outcome. Make research; choose the better one to enjoy the trading.

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