Do your really need automated trading?

Do your really need automated trading?

Yesterday we’ve focused on the trading plan, which includes a trading system inside. Today, we’ll be talking a bit more about the latest. But not a typical one or even a particular one, we’ll be analyzing what today is known as “automated trading systems”.

Just as it sounds, automated trading systems are indeed trading systems that rely on a certain applied technology that is capable of taking decisions of its own regarding when to open or close positions. Of course, a few prior instructions and configurations are needed for it to work.

In other words, a trader operates as a programmer, telling the system when to open and close trades, using different parameters, which well can be the same combination of technical indicators used by a regular trader on daily basis.

As you can probably imagine, letting a computer in charge while you go for a nap presents a series of advantages and disadvantages. And here there are some of the main:


Maximize opportunity

You are human and you get tired. Your computer does not. So as long you pay the electricity bill, it will keep running, working and performing in a constant way without interruptions. This means while you go for bed, the trading system can keep eye on the early (too early) Asian hours or even be ready for action when an unexpected event presents overnight.

Minimize emotions

Another good point is that by letting computers do the work, you are force to step back and look at the bigger picture, leaving aside emotions typically generated and exacerbated by looking at the charts ALL DAY LONG. I am guessing you know what I am talking about.

Discipline at its best

Following that same line of thought, trading decisions will be based entirely on your commands, which would probably be something like: if “x” is positive and “y” is negative, open a position of “z” for a certain amount. Emotions subtracted, discipline prevails.


Technology failure

While this is not really common, it can happen and your money is at stake. For such reason, it is important to test and retest your automated trading system before giving it a real chance. In order to make sure technology is on your side, check on your internet provider and allow cheap services. Invest in computer power and a reliable operating system.

Market failure

Have you ever seen an overnight spike on a chart out of total nowhere? Guess what, that sudden movement in the price of an asset could have been triggered by a technology failure or even a wrong input from a trader. But a machine would not recognized that instantly, exposing you to unnecessarily open or closed positions and therefore, losses.

Source link   Presented by Fort Financial Services

Start paying attention to position size

When it comes to risk management, everything counts. And defining the right size for your position plays a key role in the equation. Intuitively...

Trading journal: should you keep one?

There are so many Forex blogs out there. Sometimes I think too many actually. But some of them are pretty useful (like ours, of course) and a common...

How to 'trade the news' in forex?

I am sure you've heard of it. The term 'trade the news' refers to those guys who would rather read newspapers all day instead of sitting...

Understanding the US dollar index (USDX)

If you are trading Forex for a month or so, you;ve probably came across with the term ;US Dollar Index; or ;USDX;. We all know what a dollar is

4 steps to make your own trading system

There are a few basic ingredients that should always be present in a successful forex trading strategy. We can emphasize on the importance...

6 forex money management tips

One can never emphasize enough the importance of money management skills. No matter if we are talking about taking care of your personal...

Ichimoku: clouds that help you trade

So it seems that Japanese are not only good turning raw fish into tasty overpriced pieces of art called sushi. Exactly, they also make fantastic cars...

How to avoid losing money in crypto

If you are giving your first steps in the cryptocurrency market and you have no prior experiences trading these kind of innovative assets, you will most likely...

What interest rate differentials are for?

As it was widely expected, the Federal Reserve rose its benchmark interest rate by 25 basis points earlier this week, leaving it in a range between 1.50 percent and 1.75 percent...