Advantages and disadvantages of automatic trading systems

Automated trading, or algorithmic trading, helps determine trades. Helps to set conditions for trading throughout the entire process of trading through computer programs, and various platforms, which trading through various platforms This accounts for 70% to 80% or more of stocks traded on U.S. exchanges. Comes from an automatic trading system

in which investors can adjust investment conditions Enter and exit the stock exchange Precise money management in an automated trading system using programs to help and set strategies. Automated trading systems typically require software that connects you directly to the broker. The language used for coding will be the language specific to that platform, such as Tradestation using the EasyLanguage programming language, the ninjaTrader platform using NinjaScript, etc.

Creating trading conditions

Some trading platforms offer tools to help you create trading strategies by selecting from the platform's tools. To create trading conditions Traders can also add orders for different types of trades. Trading time

Advantages of automated trading

• Reduce mood

The automated trading system reduces the emotional aspect of trading. Stretching next to the plan This is because trade orders are executed automatically. Traders will never hesitate or question their trades. It also reduces the tendency to over-trade.

• Can test market bounces

Testing market bounces using trading conditions and past trading data to analyze the feasibility of a strategy. To reduce the gap of automated trading systems where computers cannot predict and live the risk of faulty conditions.

• Maintain discipline in trading

From creating trading conditions and automating trades This is by reducing emotions that come into play in trading decisions due to market fluctuations. such as fear of risk or greed. Automated trading has conditions and a trading plan that must be followed to reduce errors.

• improved the speed of giving trading orders.

Because it uses a computer system to calculate and can respond to trades immediately according to trading criteria. Quick entry and exit into the market to create an advantage in the market Just one second can create an advantage.

• Variety of trading

Using the automated trading system, it is possible to create multiple accounts or use different strategies at once. Makes it possible to spread investment risk to various markets and protect against risks.

Disadvantages of automatic trading systems

• Risk of technical errors

Because automatic trading involves trading through a computer system, errors can occur from the system such as Problematic internet or server crashes, etc.

• Inspection

It is an advantage to be able to use a computer for trading and be able to work all day long. However, it is necessary to constantly check because unexpected events may occur, such as connection problems. energy loss or the computer is broken which may lead to errors

• The trading plan may be too effective.

Although automated trading can use past trades to help with analysis, Which may only look good at first. And with the market fluctuating all the time, old techniques may not work in the current market, leading to the risk of accumulated losses.

• Risk of being deceived

When looking for a trading platform, you have to keep in mind that if the results sound too good, then they won't. It may be a trick of scammers who invite people to invest. You can notice if the platform is fake or not. This can be observed as follows.

1. You will need to pay first or deposit money to open a trading account.

2. Study the terms and conditions for trading on that platform.

3. Is there a certificate for you to read? Check third-party websites or financial regulatory websites.

4. Is there a trial system? Websites owned by scammers often do not have trials available.

• Automatic trading system on the server

Traders have the option to manage their automated trading via the server platform. There may be trading fees. They can scan, process, and monitor trades. This often results in faster and more reliable order entry.

Finally, although there are many reasons to support But automated trading systems should not be viewed as a substitute for carefully executed trading. Technology glitches can happen. Therefore, these systems need to be regularly checked to reduce risks and system errors. And trading is risky. You should always study before investing.