Why Should You Consider Automated Trading
Forex trading has revolutionised from traditional manual trading to automated trading over the years. There have been many ongoing advancements in the way traders can place currency trades. But recent years have seen even more development with some software developers stepping it up a notch by creating automated trading platforms that let users open and close trades without the need for clicking a button. All they have to do is apply a code based on their trading rules and techniques, and it will choose deals and carry them out as directed.
In general, automated trading can be beneficial for a number of reasons and here in the article we are going to talk about all those reasons that should motivate you to consider automated trading.
Elimination of Emotions
If you’ve ever traded, you must be aware that a significant portion of what you do as a trader involves feelings like fear, greed, and remorse. All of these may influence your judgement and ultimately harm your performance. By using an automated trading system, you may eliminate these feelings and execute your strategy according to a set of rigid criteria.
As automated trading keeps emotions to a minimum, traders often find it easier to follow the plan. They won’t be able to hesitate or second-guess the trade since trade orders are immediately executed once the trade rules have been satisfied. Automated trading assists traders who are hesitant to “hit the trigger,” as well as restrain those who are inclined to overtrade, buying and selling at every chance they detect.
Active traders have to monitor their positions and market movements for hours on end. They have to utilise their expertise and abilities to put their strategies into action which might take a lot of time and effort. But with automated trading systems traders are able to trade numerous accounts or different trading methods simultaneously by simply keeping an eye on the algorithms to make sure they are doing as expected.
Ability to Backtest
Backtesting uses previous market data to assess a strategy’s feasibility. Since automated trading systems work on explicit instructions, it doesn’t leave any space for interpretation. Therefore, before putting their money at risk in live trading, traders can test their strategy on historical data. With the aid of an automated trading system, they will be able to backtest their strategy, which in turn provide them with priceless insight into whether or not their plan has been profitable in the past. If it hasn’t, they will have to find the issues and fix them to make the strategy work.
Improved Speed of Execution
A few seconds earlier entry or exit can have a significant impact on the result of a deal. This is why it’s extremely important that orders are executed in time. Automated systems help traders with just that. Automated trading systems are able to efficiently generate orders as soon as trading requirements are satisfied since computers react to shifting market circumstances instantly. All additional orders, including stop losses and profit targets for protection, are automatically produced as soon as a position is taken.
Automated trading enables traders to increase their potential profits by eliminating the potential of human emotions and mistakes which can squeeze out gains. Also automated trading is a man-made system. Therefore, you can expect some technological problems. As a result, it is advisable that you develop or utilise the system with caution while continuously keeping an eye on the execution process.