Automated trading is a method used by people to take part in the stock market – through the use of a program that has pre-set rules by executives for those who want to enter or exit trading.
Investors and forex traders have the advantage of setting entry and exiting rules into the financial market. Once the rules have been set, the system is able to automatically trade using those rules.
How does automated trading work?
The first step is to choose a platform and ensure that all the rules have been set. Composing trading rules requires someone with experience in the financial markets. You will then customize the algorithm to place trades automatically.
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Rules for entering or exiting the market can be based on conditions such as Moving Average crossover or complicated strategies that require extensive experience about the programming language specific to a certain trading platform.
Automated trading was motivated by the fact that a majority of people who participate in the stock market don’t have adequate knowledge of how the financial markets work.
The good thing about automated trading is that it doesn’t require a lot of investment to set up. They can be accessed by almost anybody who has a computer and internet connection.
Automated trading and the forex market
It doesn’t matter if you are a beginner or an experienced trader, you can easily participate in the currency market and make and make informed decisions.
The most popular automated forex trading bots comprise computer programs that have been programmed to conduct market analysis as well as the price charts of different currencies.The system is able to identify vital trading signals such as price instability patterns, world news that can significantly affect the stock market and all manner of spread discrepancies.
The automated trading system is also able to detect profitable pairs of currencies before placing trades. If the system is programmed with user-defined criteria, then it will be able to broadcast buy and sell alerts. This is important because it can help the trader to maximize profits from every transaction.
Platforms where automated trading can be performed
The success of an automated trading system also depends on the platform being used. Below are some of the commonly used trading platforms:
MetaTrade4
This is one of the popular trading platforms. It can be used for both normal and automated trading. One can import Expert Advisors (EAs) to aid in identifying opportunities as per the set parameters or conditions.
ProRealTime
ProRealTime enables traders to automate their transactions by providing both simple and sophisticated tools to execute trades. The platform contains more than 100 indicators. Besides, it is optimized for easy use by both experienced and beginner traders.
APIs
The good thing about this platform is that it gives traders an opportunity to build or create an expert trading algorithm from scratch to the end. Traders are also able to assess market instruments, see real-time and previous market prices, and maintain a watch list.
Benefits of automated trading
There are several benefits associated with automated trading. Below are some of them:
• It gives traders an opportunity to control their own schedules using various trading strategies
• Traders can participate in the stock market at any time of day or night
• It gives everyone an opportunity to participate in stock trading regardless of whether they are experienced or not
• Traders are able to analyze the market and maximize profit through trades
• It reduces the impact of anxiety and worries through planned techniques
• It is less expensive – considering the fact that a trader only needs a computer and internet connection
• It allows traders to execute sever
Is automated trading effective?
The question about the effectiveness of automated trading depends on several factors, such as the platform through which the automated trading system is being used, the experience of the person using the software, market forces among others.
That’s why it is important to choose an automated trading system you are conversant with.
