Benefits of Automated Trading Systems

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Benefits of Automated Trading Systems
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Automated Trading System
It is reported that more than seventy percent of
the shares traded on the US stock exchanges come
from these automatic trading systems. Automated
trading system requires the use of software
linked to a direct access broker.
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Here are some of the benefits of having the
computers for trading
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1 Helps in Minimizing Emotions

Automated trading system minimizes emotions in
the process of trading so that traders can easily
stick to the game plan. All the orders are
automatically executed. So, once the rules for
trade are set and have been met, they wont be
able to question it. Moreover, it helps those
traders who are afraid to go ahead. Apart from
this, it helps those traders who have tendency to
overtrade including selling and buying at every
identified opportunity.
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2 Backtesting

It is applied to determine the feasibility of the
idea. All rules are required to be complete with
no place for interpretation while designing
automated trading system. You cant afford to
guess anything and need to know what to do
exactly. Before risking their money in live
trading, traders can check these precise rules
and then test them on the data from the past.
Besides, careful backtesting allows traders to
expect the amount they can win or lose.
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3 Diversifying Trading
System for automated trading allows the user to
trade various strategies or multiple accounts at
a time. It helps in spreading the risk over
various instruments while creating a hedge
against the losing ones. Besides, being automated
it helps in execution in milliseconds. The
computer scans for different trading
opportunities across wide market range and
monitor trades along with generating orders.
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4 Enhance Entry Speed for Orders
Computers immediately respond to the changing
conditions of market. So, automated systems
generate orders as early as the trade norms are
fulfilled. Getting few seconds out or in of a
trade earlier makes a huge difference in the
outcome of trade. The moment you enter the
position, all the orders are generated
automatically such as profit targets. Besides,
markets move at a quick rate. So, it is
discouraging to have a trade get to below past a
level-before stop-level or profit target before
the entry of orders. However, this situation is
avoided with automated trading systems.