Automated Trading Systems – 5 Reasons To Use Them

Automated trading systems are quite a popular trend in the financial sphere. They offer investment assistance to financial traders. A striking feature of this model is its manner of operation. By a thorough analysis of varied market factors, it dictates the right time to trade. Additionally, it also executes trades automatically. Automated trading systems are quite dependable as most of the times their interpretations hold true and each trade trigger executes each trade successfully.

Screen capture of an automated trading system:

Automated Trading System


Advantages of an automated trading system over humans

 1.       Automated Analysis Widens the Scope

Also called an algorithmic trading system, an automated model has a wider scope compared to the ability of humans. It can trade a variety of markets, simultaneously. To add, they operate and monitor markets round the clock and are thus able to capitalize on all price movements. Humans lack the ability to watch, analyze and trade multiple markets at the same time nor they be available to trade 24/7.

2.       Automated Trading Eliminates the Emotional Aspect

Speaking about humans, the emotional quotient plays a crucial role in how and when individuals initiate trades. However, when it comes to investments, emotionally-driven decisions are not the best decisions. For instance, an individual might prefer to trade in a particular market. This preference might have developed because of his ability to interpret a market better than the others. There is nothing wrong in this approach, as not everyone can be an expert in all fields. However, his limited ability and knowledge cuts his earning capacity. Unlike this, an automated trading system enables a trader to dabble in a variety of markets and introduces him to multiple earning opportunities. Humans make decisions based on intuition while automated trading systems make decisions based on statistics and other thoroughly researched factors.

3.       Filtering  Important and Unimportant Factors

Market research is a basic requirement if you want to start investing in the money market. The human brain, although very powerful and capable, can absorb only a certain amount of information at a given time. As a result, humans tend to overlook important aspects. Once again, their decisions are colored by personal opinions. They only work with those factors they deem important. On the other hand, they give undue importance to non-essential factors. And automated trading system takes every single factor into consideration, but when doing so, they also filter the unimportant factors from the important ones.

 4.       Less Scope for Mistakes

Most errors are human based. Making mistakes – overvaluing or undervaluing things – is common to man. However, automated trading strategies are based on computerized calculations. Therefore, they are less prone to error.

 5.       A Boon for Trading Professionals and Amateurs

Algorithmic trading systems cater to professional traders as well as non-trading experts. In case of the first, it helps them determine the right time and the right markets to trade in. In case of the second, it provides a learning curve and helps them deal in a previously unexplored field.


So, whether a professional trader or a novice, you can use automated trading systems to trade successfully and makes this possible.

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