What is Automated Trading Software, And Why Has it Become So Popular?

Automated trading systems are taking over financial markets. A study found that they account for substantial trade volumes, especially in the commodities and futures market. Thus, they are increasingly being embraced by traders. The reasons that traders give for their widespread use include the convenience and accessibility that they offer.

What Is an Automated Trading System?

Automated trading systems — also referred to as mechanical trading systems, algorithmic trading, automated trading, or system trading — allow traders to establish specific rules for both trade entries and exits that, once programmed, can be automatically executed via a computer. Various platforms report 70% to 80% or more of shares traded on U.S. stock exchanges to come from automatic trading systems.

Designing a Trading System- III - TheLiveTradeRoom

Traders and investors can turn precise entry, exit, and money management rules into automated trading systems that allow computers to execute and monitor the trades. One of the biggest attractions of strategy automation is that it can take some of the emotion out of trading (which is a good thing) since trades are automatically placed once certain criteria are met.

Automated trading systems typically require the use of software linked to a direct access broker, and any specific rules must be written in that platform’s proprietary language.

Three very important aspects of automated trading have contributed to its explosion in popularity:

  • It removes human fallibility in trading by automating trade according to specific indicators or conditions.
  • It allows access to a variety of markets simultaneously.
  • It allows anyone to engage in trading, provided they have access to both a computer and good internet.

Advantages of Automated Systems

There is a long list of advantages of using automated trading systems – including:

They Reduce Emotional Trading

As earlier mentioned, humans are susceptible to emotions that can cloud judgment when making trades. A trader may hesitate, pull back, or get influenced to trade in an unyielding way. Automated trading systems minimize such emotional trades by executing trades instantly after the rules have been set. Once the computer executes, the action cannot be undone. This capability is beneficial to traders who are afraid to make trading moves. It is also beneficial to those who tend to overtrade. Many Cryptocurrencies traders are using automated trading platforms because they find it challenging to maintain their emotions in that aggressive market.

Reasons People Trade: Optimize Your Trading Strategies

They Preserve Trading Discipline

Automated trading systems work under set rules, and they execute trades automatically. This in itself brings an aspect of discipline in market trading. It maintains discipline even in volatile markets.

Automated Trading System Increases the Speed of Order Entries

Automated systems are quite swift in generating orders. It takes seconds for one to get in or out of a trade. The response to dynamic market conditions is also swift, influencing positive outcomes for traders.

Trade Diversification

Automated trading systems can be used in diversifying trades. Traders can trade with multiple accounts or multiple strategies at the same time. The result is a diversified trade that has risks that are spread over various instruments. Humans are unable to execute such diversified trades swiftly. They may take a lot of time to do so. However, computers can identify opportunities across broad markets in just a matter of seconds.

Who should use an automated trading system?

It doesn’t matter if you are a skilled or a new trader. Automated trading systems are for everyone.

  • Skilled traders will take advantage of the features of the automated system and set up a large number of trades quickly, generating more profit. Many experienced traders are using automated trading platforms for trading Cryptocurrencies because of the potential to gain massive amounts quickly without involving emotion that could cause losses. 
  • Beginners will enjoy the opportunity to trade smartly without years of knowledge and experience in traditional trading methods. Of course, the automated system will prevent them from trading out emotions which is the cause of the loss of 90% of beginners. Most of the trading platforms are providing a personal account manager like ETHEREUM CODE, which is a huge benefit for beginners – We mentioned what other platforms are providing this service in the reviews by the end of the article.

How to build your own automated trading system

Frequently Asked Questions

Is an Automated Trading System the Right Choice For Me?

Automated trading might be the right option for you if you’re looking for a technique that helps you trade according to predefined parameters. This can be especially helpful when trying to avoid emotional trading. Automated trading is a good solution for someone who wants a low-maintenance trading strategy that relies on advanced technology.

I Want To Start, How Do I Choose The Right Platform to Start With?

Here’s the high-ranked automated trading software of Coin-Informer reviews section.

Are you ready to start generating profits from an automated trading system? – Reading the full review might help you decide which platform will fit your needs.

Read The Full Reviews:
1. QuantumAI – Best Overall, Multi-Award Platform, Rated 4.4 / 5
2. Immediate Edge – User Friendly, Rated 3.9 / 5
2. ETHEREUM CODE – Active Personal Account Manager, Rated 3.5 / 5
3. Crypto Hopper – Fast Transactions Between Exchanges, Rated 3.2 / 5