- Listed: August 11, 2017 11:50 am
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How Traders Benefit Using Robotic TradingSystems: Automated Stock Trading
The stock market has evolved so much over the pass years that now traders and investors can turn precise entry, exit and money management rules into automated trading system that allows computers to execute and monitor trades.
A robotic trading system is a computer program that creates order and automatically submit them to a market center or exchange. They can execute repetitive tasks at speeds with order of magnitude greater than any human equivalence, little wonder it has become so popular in stock market trading.
Benefits ofUsing Robotic TradingSystems:
They are various kind of advantage and benefit using a robotic trading system to monitor the market for trading opportunities and executing trade. You can find some of them below:
- Drastically minimizing emotions:
The most important thing traders need to get rid of while trading in stock market is their emotions. If you let your emotions get in the way of your trades, you might end up losing big time. Automated trading systems minimize emotions throughout the trading process. By keeping your emotion in check, traders typically have an easier time sticking to the plan. Because trade orders are executed automatically, traders will not be able to hesitate or question the trade neither will they be able to over trade.
- It provides consistency:
This can be a major challenge in trading. Most times traders tend to ignore the rules thereby altering any expectancy the system would have had. Even though there is no way a trading plan can win 100% of the time, losses can be traumatizing, so a trader who has like 3 losing trades in a row might give up hope and decide to skip the next trade not knowing if that trade would have being a win. That’s where an automated trading system comes in. it allows traders achieve consistency by trading with a plan.
- Provides back testing: when designing a system for automated trading, the computer has to be told exactly what to do. Traders can then take these precise set of rules and test them on historical data before risking money in live trading. Back testing allows traders the opportunity to test and determine the viability of the idea.
- It improves order entry speed:
Automated systems can generate orders as soon as trade criteria are met because computers can respond quickly to the changing market conditions. As soon as atrade is entered, all other orders are automatically generated including stop loss and profit targets. An automated trading system prevents you from going past your stop loss or profit target.
- It allows multiple trading:
A robotic trading system permits a trader to trade multiple accounts or even better, various strategies at a time. The system can effectively scan for various trading opportunities across a range of markets to generate orders and monitor trade efficiently. The purpose of this is to spread risks while creating a hedge against losing positions.
Just think about all traditional risk control and safeguards that relied on human judgment and manual speed are now automated to evaluate and control trading. Actions considered to be very challenging for a human to accomplish is now efficiently executed by a computer in a matter of seconds.
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