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Benefits of Automated Trading Systems

Automated trading is an efficient and effective method of trading having many benefits over the traditional methods. Technology has lot of potential and will continue to evolve with time. So, investors should combine both the trading techniques traditional and automated in these times.

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Benefits of Automated Trading Systems

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  1. Benefits of Automated Trading Systems

  2. Automated Trading System It is reported that more than seventy percent of the shares traded on the US stock exchanges come from these automatic trading systems.Automated trading system requires the use of software linked to a direct access broker.

  3. Here are some of the benefits of having the computers for trading:

  4. #1 Helps in Minimizing Emotions Automated trading system minimizes emotions in the process of trading so that traders can easily stick to the game plan. All the orders are automatically executed. So, once the rules for trade are set and have been met, they won’t be able to question it. Moreover, it helps those traders who are afraid to go ahead. Apart from this, it helps those traders who have tendency to overtrade including selling and buying at every identified opportunity.

  5. #2 Backtesting It is applied to determine the feasibility of the idea. All rules are required to be complete with no place for interpretation while designing automated trading system. You can’t afford to guess anything and need to know what to do exactly. Before risking their money in live trading, traders can check these precise rules and then test them on the data from the past. Besides, careful backtesting allows traders to expect the amount they can win or lose.

  6. #3 Diversifying Trading System for automated trading allows the user to trade various strategies or multiple accounts at a time. It helps in spreading the risk over various instruments while creating a hedge against the losing ones. Besides, being automated it helps in execution in milliseconds. The computer scans for different trading opportunities across wide market range and monitor trades along with generating orders.

  7. Automated trading is an efficient and effective method of trading having many benefits over the traditional methods. #4 Enhance Entry Speed for Orders Computers immediately respond to the changing conditions of market. So, automated systems generate orders as early as the trade norms are fulfilled. Getting few seconds out or in of a trade earlier makes a huge difference in the outcome of trade. The moment you enter the position, all the orders are generated automatically such as profit targets. Besides, markets move at a quick rate. So, it is discouraging to have a trade get to below past a level-before stop-level or profit target before the entry of orders. However, this situation is avoided with automated trading systems.

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