Market trading is something that can get quite complicated over time. Success can come in many fronts, much of it through constant and careful monitoring and some bit of intuition that comes from experience. The complexities of trading can lead traders to depend on automated trading systems for some bit of help.

What Is It?

Automated trading systems rely on the use of computers in order to help traders monitor the markets as well as execute trades based on a wide range of rules and strategies. It is a trading system where traders establish specific rules for trade entries and exits and program it into a computer to automate the trade moves.

Given certain specific conditions, an automated trading system can make a complicated strategy seem easy as the computer does all the calculations necessary and giving the best possible options for traders based on the rules it is programmed with. But is it always successful in predicting the best reading outcomes? Here are the advantages and disadvantages of automated trading systems.

Advantages Of Automated Systems

There are several advantages that using an automated trading system can offer. One of them is that it can provide a certain convenience to traders in terms of automating their trading strategy. Another known advantage is that it can help keep the emotions out of the trading process, which can lead to a more effective trading strategy. And because of this, consistency and a certain amount of discipline can be achieved in sticking to the strategy used.

Disadvantages of Automated Systems

Along with the advantages of employing an automated trading system, there can also be certain disadvantages. One of them is the possibility of mechanical failures. Since the trading system is programmed into a machine, there is always the risk of the computer or server bogging down at any time. There is also the risk of losing Internet connection, the risk of power outages or the risk of the computer freezing up at a sensitive time of the trading day.

Another disadvantage is that traders may need to closely monitor the automated trading system itself aside from monitoring the markets. And since most markets don’t usually move in a rational or logical manner, there can also be a risk of even the most exceptional results not to work in live trading. When using automated trading systems, traders should be aware of the advantages as well as the disadvantages.