Automated trading systems are overtaking financial areas. The research found out that automated trading software accounts for considerable trade volumes, mainly in the commodities and futures market. Hence, traders are increasingly using them. You should use automated trading systems because of the convenience and accessibility you can get from them.
What Do You Mean by an Automated Trading System?
An automated trading system allows you (the trader) to set particular rules for trade entries and exits. Once you program them, you can ensure that they get executed electronically.
Automated trading is also known as algorithmic trading, as you use computers to perform trades. The conditions for these trades are somewhat simple. For example, you can base them on moving average crossovers. So, here are some unique features of an automated trading system that you should know about.
Access to Market and Company Data
The designing of trading algorithms is done to act on real-time market data and price quotes. You can find a few customized software that accounts for company fundamentals data such as earnings and P/E ratios. The good algorithmic trading software will also offer you real-time market data feed along with a company data feed. You may find this feature build-in into the system, or you may have the easy provision to integrate it from alternate sources.
Business Functions and Automation
Automated trading is highly technical and completely automated. The software helps you cut down on an hour of manual human effort and labour. Hence, you save valuable time and keep your business streamlined.
Connectivity to Various Markets
Many algo trading software supports various instruments and markets to offer a vast range of trading strategies. If you look forward to working across various markets, it may interest you that every exchange might offer you its data feed in a different format, like Multicast, TCP/IP, or FIX. The automated trading software you use may accept feeds of diverse formats.
The Feature of Backtesting
Once you use an automated trading system, you can do backtesting. You can check the chances of success because nearly all the automated trading systems will offer you the ease to test your strategies and rules against the overabundance of historical data.
With this feature’s assistance, you can hone a perfect strategy, and you can also straighten up any creases before you invest real money on the line. Backtesting is a crucial feature that helps you to forestall correctly about your win or loss in any given condition. It is because you can determine the life expectancy rate from the trading software you use.
The automated trading system enables you to run trades over markets simultaneously as you would take to buy or sell in one market. As a result, it massively increases your trading ability by maximizing the overall speed.
You Get Diversity
An automated trading system enables you to increase your hand by using various accounts and any number of strategies simultaneously. It allows you to spread risk over diverse instruments while you are still hedging against losing the positions.
The right automated trading system will allow you to use a wide range of useful features to ensure that you can create and test quantitative trading strategies at your convenience. Hence, you can fit your strategy around your schedule, and you can execute trades automatically; it does not matter if you do it during day or night.
Customization and Configurability
If you use good trading software, it offers you standard built-in trade algorithms. Being a trader, you may experiment by switching to the twenty-day MA with the one hundred -day MA. Unless your software offers such customization of parameters, you may be restricted by the built-in fixed functionality. However, trading software mostly has a high level of customization and configuration options.
Good Accessibility and Performance
The automated trading system is robust and reliable because it works on a highly concurrent, memory-efficient, and multi-threaded architecture. It allows you to perform in an effective, safe, and efficient way.
To Maintain Discipline and Consistency
A challenging side of trading is to plan your trade and trade the plan. Even when you have formulated your strategies, it can be challenging for you to adhere to your plans because of the market volatility.
When you use an automated trading solution, it will work with the market and stay consistent and disciplined despite the fluctuations. You will see that the strategy’s rationality stays maintained, and it does not lose track because of any effect of impulses such as fear and greed.
To sum up, automated trading software offers you swift and timely access. Before you venture into algorithmic trading, you must understand well the main functionality of your trading software.