Last Updated on February 13, 2023 by Faiza Murtaza
Before getting into the topic of Technical analysis and automated trading, we need to understand what automated trading means and its benefits. Automated trading will ensure the efficiency of our trades is on the rise. This is done by executing the CFD trading tactics that are executed much faster. This is reason enough to learn the advantages of automated trading platforms so that they can increase the value of your strategy. One of the major uses of trading is that it facilitates us to perform several trades within a short period. This is possible because the trade rules are set on the parameters predetermined by us. We can also follow the trade and trends with the predetermined strategies by setting the algorithms.
When did Automated Trading Begin?
Traders started to benefit immensely from automated trading, and the journey is as follows:
- Richard Donchain introduced automated trading in the year 1949. He pre-defined a set of actions for buying and selling. Financial assets can be traded using automated trading.
- In the 1980s, it became so popular that famous traders like John Henry adopted rule-based trading strategies.
- Only during the 1990s, a more advanced version came into existence. Advanced automated trading brought retailers into the trading domain. The trading system is helping thousands take good care of their assets globally.
What is Technical Analysis?
Investors explore stocks depending on revenue, industry trends, or valuation. However, these fundamental factors do not echo the market price. In such situations, the technical analysis predicts price trends by investigating the data – value, and volume.
Understanding Automated Trading
Automated trading is pre-programmed trading commands. The trader will combine a set of parameters after thorough technical analysis by setting the parameters to open orders, trailing, and sure stops. Automated trading enables you to carry out trade quickly without worrying about emotions. Since the parameters are pre-built, trading decisions are taken quickly. Pre-determined strategies are used to follow the trend to buy or sell accordingly.
Benefits of Automated Trading
- The strategy you have devised can fit your schedule, ensuring that the trades are executed automatically throughout the day.
- The planned strategies can lessen the consequences of gut and emotional reactions.
- It will help recognize opportunities and study trends based on the indicators.
- It can also accomplish many real-time trades at the same time and eliminate manual execution.
How does the Automated Trading System Work? Here is a stepwise explanation:
- Firstly, the trader requires the best online trading platforms in which all the parameters for the trading strategy are set.
- Depending on the trading experience, the trader develops entry and exit functions. This is done through an instructed input.
- Rules and stipulations will depend on the trade time, the price during the entry & exit positions and the amount of trade.
- The algorithms consign the trade each time the conditions are satisfied based on the trader’s requirement.
- The automated trading system will continuously monitor the trades, market prices, etc. and accomplish the trade each time the programmed instructions or parameters are satisfied.
Is Automated Trading Right for you?
Automated trading may be the right option if you search for a system that will help you trade within the pre-determined factors. This is the right option for those trying to refrain from emotional trading. It is also an apt solution for those looking for a low-maintenance trading plan that banks on highly developed technology. Do not wait any further, just plunge into the market without having to worry about waiting for the right time.
The working process is simple, choose a platform, pre-set the parameters, and add inputs like entry time and exit time, and now the trade is executed as per your pre-request.
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