Automated Trading Software
What do we call Automated Trading Software System?
Automated trading software or, in other words algorithmic trading, mechanical trading system or system trading is a preprogramed system used by traders.
The automated trading software allows the traders to set up precise rules for trade entries and exits. The predefined trades doesn’t require human intervention and the computer can execute it automatically.
The entry and exit specifications can be based on simple settings such as the Bollinger bands break out or it can take form as highly sophisticated trading strategies that require adept understanding of programming languages of the platforms. The automated trading software systems are associated with software written in the platform’s programming language.
The broker has direct access to the software. The most common programming languages for automated trading platforms are C#, Java, EasyLanguage and NinjaScript.
The strategy building “wizards” enable the traders to build from indicators (Oscillators, Bill Williams, volumes etc.) automatically executed rule systems. For instance the user is able to set up rule, that a short position will be entered once the price scratches the predetermined resistance level. The trader also can set up the type and timeframe of the trade orders.
Many traders tend to write their own indicators or demand meticulous work from the developers. The task to write own trading system requires great skills, using the platform’s wizard is easier, but it also lacks the flexibility and fine tuning of the automated trading systems. Please note: there are no automated trading software systems that can offer trading without loss.
After the trading system has been established the computer automatically seeks buy and/or sell opportunities based on the defined set of rules. To avoid losses, trailing stops, profit targets and stop losses will be added automatically to the orders.
Why is it beneficial to use Automated Trading Software Systems?
Algorithmic trading offers plenty of advantages:
Minimizing Emotional Factors: Traders do not have to stress on their trading decisions throughout the trading process and can lay back and monitor the trading system’s performance. The system also helps avoiding the common trading bias called overtrading.
Discipline: The trading system keeps maintaining trading discipline because the trading decisions are executed automatically. The trader can observe the markets calmly without the temptation to milk further the markets or fear of loss.
Trading Diversity: The trading system scans the entire market for trading opportunities which is hardly possible for a human to carry out. The full scale market penetration enables the trader to hedge against losses.
Consistency: Traders might hesitate executing orders after a losing streak. The automated trading software system helps maintaining consistency and eliminates ambiguity in decision making.
Immediate Order Entry: As soon trading specifications are met, the automated trading system executes within nanoseconds the trading orders. The trailing stop, stop loss and profit target are automatically generated upon entry as well.
Example of Automated Trading Software
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