As the name suggests, an automated trading system is a mechanism that allows an equity investor to create rules for trading various assets and derivatives in such a way that the trading is done through a computer. You only have to define the entry and exit rules of a transaction, and the algorithm takes care of the rest. One of the most used tools for investing in the stock market: algorithmic trading or automatic trading.
The best decision is made with a calm and thoughtful mind.
The most important aspect that governs the market is sentiment. Also the most discerning investor quickly realizes that his best investment decision he makes with a calm and thoughtful mind. What could be better than a computer powered by the rules and criteria that you favor to execute your transactions at best.
You first choose a trading platform automatically and define the parameters of your trading strategy. The rules and conditions thus created, your personalized algorithm will follow them to place orders for you. Your trading strategy thus established will continuously monitor market prices and orders will be automatically executed if the predefined parameters are respected. The goal is to execute orders more quickly and efficiently and to take advantage of market events.
For example, to take advantage of an arbitrage opportunity in the forex market, you must provide the amount at which a currency should be bought or sold. Once the software is filled in, you benefit from an automated trading system.
The decisive advantages of automatic trading
You suppress emotions: everyone often experiences strong emotions that negatively affect their decision-making. If you have set rules in a calm and thoughtful mind, the system will support trading and reduce any possibility of drifts and over-trading.
You reduce errors : the machine is more efficient than the human in carrying out an order that does not require the subjective application of the mind. An order of only 100 shares cannot be taken by the machine for an order of 1000 shares.
You save time and money : several actions are done at the same time, the best advantage of an automatic trading is that it is in fact automated, which means that you do not need human intervention to manage it all the time. So you can redirect your time and energy towards creating a better trading rule and managing multiple accounts at the same time.
You diversify easily : with automatic trading you can trade on several accounts at the same time, but also trade multiple strategies at the same time. You can therefore diversify and reduce risk by deploying several strategies that oppose each other.
You gain in finesse of execution: making a decision at the right time in a rocky market is often tricky. Algorithmic trading places your order instantly and does it in a fraction of a second.
You discipline your negotiations : even the most seasoned can sometimes be taken by the euphoria or the pessimism of the market, the automatic trading guarantees you a discipline in the execution of your operations.
The advantages of automatic trading are decisive, high precision, rapid execution of orders, possibility of diversification… allow you to succeed by making your negotiations more relevant.