Automated trading systems are now dominating the world of traders in the financial markets. Read this article to know the benefits you can get from using them!
Automated trading decreases LBLV Forex Broker the amount of emotions throughout the trading process. By keeping your emotions in check or even out of the equation, you can usually find it easier to stick to the plan. Since trade orders are executed automatically once the trade conditions have been met, you will not be able to hesitate or question the trade.
In addition to helping traders who are afraid kick it off, automated trading can also prevent you from overtrading, which is the habit of buying and selling at every perceived opportunity.
Backtesting applies trading rules to the historical market data to determine the viability of the strategy. When designing a system for automated trading, all rules need to be absolute, with no room for guesses or interpretation.
Traders Forex Broker List can take these precise sets of rules and tests them on historical data before risking money in live trading. Careful backtesting lets traders evaluate and fine-tune a trading idea, and to determine the system’s expectancy or the average amount that you can expect to win or lose per unit of risk.
Because the trade rules are established and trade execution happens automatically, discipline can be preserved even in volatile markets.
Discipline is usually lost due to the emotional factors such as fear of taking an L, or the desire to rake in a little more profit from a trade.
Automated trading helps guarantee that discipline is maintained because the trading plan will be followed exactly. Also, “pilot error” is very much reduced.
One of the biggest challenges in trading is to plan the trade and trade the plan. Even though a trading plan has the potential to be profitable, traders who ignore the rules are changing any expectancy the system would have had.
There is no such thing as a trading plan that wins 100 percent of the time. Remember that losses are a part of the game.
However, losses can be psychologically traumatizing, so if you have two or three consecutive losing trades, you might opt to skip the next trade. If the next trade would have been a winner, you have already lost the expectancy the system might have had. Automated trading systems help you achieve consistency by trading the plan.
Improved Order Entry Speed
Since the computers react quickly to changing market conditions, automated systems are able to generate orders as soon as the trade conditions have been met. Getting in or out of a trade a few seconds earlier can make a huge difference in the trade’s outcome.
As soon as the position is entered, all other orders are automatically generated, including protective stop losses and profit targets. Markets can move quickly and it can be demoralizing to have a trade reach the profit target or blow past a stop-loss level – before you can even enter the trade.
Lucky for traders, an automated trading system can prevent this event from happening.