Over the years, Forex Trading has revolutionized from the traditional manual trading to automated trading systems, where analysts and traders code programs that automatically execute their trades.
Trading platforms range in number, and over the years, traders have effectively used them to trade different instruments online including commodities, metals, currency pairs and stocks. However, there are several positives emanating from automated system trading.
Some years ago, traders would only buy stocks direct from the exchange itself but nowadays, it is possible to buy stocks online and make significant profits within a few hours, days or weeks.
Now, in the recent past, some software developers have even taken the game further by developing automated trading systems, ones that allow traders to open and close trades without pressing a button. All they need to do is apply a code based on their trading rules and strategies, which then can pick trades for them and execute according to instructions.
This new method of trading has enabled several traders to join the world of online stock trading and helped in giving a chance to those who do not have the financial muscle to participate in exchange based investing (where investors buy stocks and own them before cashing on them). In general, automated trading systems have significant benefits to traders and most of them are taking advantage of this unique opportunity.
- Buy expensive stocks and apply shorting strategies
With online trading systems, traders can trade stocks that they could otherwise find expensive to own like Apple, and Google.
Additionally, they can also cash on their trades within a short period. Online stock trading has also allowed traders to apply shorting strategies on stocks that would otherwise require a huge margin in exchange based investing.
- Take emotion out of the game
One of the biggest benefits of using automated trading systems is the ability to take emotional trading out of the equation. With a trading system, it is hard for traders to find themselves making decisions that are solely based on emotion.
In other words, we all know that the global financial markets will always remain volatile regardless of the prevailing economic conditions.
Therefore, using a rules-based system to execute trading decisions can spare traders a lot of trouble during times of uncertainty.
- Helps in implementing strategy
Automated trading is one of the best ways of implementing a trading strategy. Some traders prefer to trade within a particular strategy as a way of making consistent returns.
With pre-coded trading programs, it is quite easy to stick to your trading strategy and continue minimizing the risk of loss, while at the same time capitalizing on low risk opportunities. It all depends on your strategy.
Additionally, automated trading helps you in assessing the market from an objective point, because your goal is not entirely based on current events, but what you perceive could happen in the future. Therefore, using an automated trading system where you are able to generate trading rules and forecasts can be very handy, especially during times when markets appear least predictable.
- It can afford you time to do other businesses
Automated trading allows traders to conduct other businesses without worrying about their open trades. Once you have put down your trading rules and goals, trades can close by themselves whether you are asleep or at work.
This type of trading has been associated with part-time traders for years, as they only spare a small amount of time for their trading activities. This is when they take an overview of their trading rules and strategies and compare it with the market to see whether they are still within the game.
Note that, sometimes the price of the underlying security or currency pair might slip or rise well beyond your trading rule limits, thereby limiting your potential for profits. This is why volatile market conditions provide the ideal opportunity for automated trading strategies.
As discussed, it is quite clear that trading systems could be an important part of a trading strategy for any trader, especially to those who prefer minimum direct interaction with the market.
Traders can either choose to download the program and install it in their computer or trade stocks and other instruments directly from an online platform.
There are several platforms that traders use including FXCM, MT4 and Trade Station, which are some of the most popular ones.
Additionally, there are also those that provide traders with the opportunity to come up with their own trading rules upon which, they can implement their trading strategies.