With the advancements and growing technology, the automated trading has become a part of most of the individual traders. Earleir, the traders have to stick their eyes onto the screens and depended upon many managers; but the algorithmic trading systems have proved to be a boon to the trading world. This automated trading is also termed as Algo-trading (Algorithmic trading), Black-box trading or Grey-box trading.
In this system, one makes use of the computer programs that help in implementing a trading strategy with predefined parameters and conditions. With Algo-trading, the system takes decisions about opening and closing the orders without the need of any human intervention. Following are few advantages listed for automated trading:
- Automated placement of Orders:
Computer system and programs works more speedily and accurately than the individuals and therefore, are quick to react to the dynamic markets. As soon as the traders’ standards are met, the system generates orders. When the position is opened, the already stated stop loss and take profits level also get in place.
- Gives the capability to perform Back-testing:
Back-testing is done on the historical data so as to determine the suitability of trading idea or strategy. Before entering any trade base upon your preferred parameters, check it on the past data so as to prevent any risk or loss to your hard-earned money. Back-testing will help you in finding out the probable results and will let you evaluate the strategy.
The Automated trading system allows the traders to use multiple strategies simultaneously. This will help you trade over various instruments at the same time and can create a hedge over your losing positions.
- Trade at your own ease:
Even if you are not their on your system or not watching the changing numbers in the market, there is no need to worry as you have your algo working for you. So, if you are out for a party or taking a nap, your automated trading system is functioning for you.
- Discipline of Trading:
Sometimes getting afraid from our losses the traders do not go by their trading plans. With the help of Automated Trading, one can follow a predefined discipline and his trading plan gets executed.