Trading System

What to Expect in an Automated Trading System

Having gotten into trading, there is a possibility that you’ve already explored some options for an automated trade system. Don’t just bite the attractive bait in front of you just yet. You need to find out first if this kind of system can help you or not.

Before anything else, take note that traders define automation differently when they apply the term to trade plans. Investors who have been in the markets for a very long time would most likely be in search of services or tools that can automate only a portion of their trading approach or plan. The best example for this is an auto feature for stop losses. The automatic feature here is the instant trigger of stop loss orders under specific conditions.

If you ask a hardcore trader, he will most likely tell you that it is vital to have some features and functions automated. As illustrated in the stop loss example, this specific automatic trading system feature can secure profits and protect investors from losing a great deal of cash.

On the other hand are traders who treat automation in a different way. What they may really want out of an auto tool is a way to completely automate the stock, forex or options trading system from start to finish. They expect to only have to install a program or piece of software that will generate recommendations for them to execute when they trade. These tools don’t require a lot of effort and time from their users.

 System Trading

This second concept should be looked into more closely. First ask yourself if there is even actually a real tool out there like this. There are software products in the market that certainly create the impression of full automation. These are what are more commonly tagged as black box systems.

To be more precise, black box systems are programs that give out suggestions based on some internal instructions that they’ve been fed. These aren’t very good tools to consider using simply because there is no automated trading system that is as good as people in making judgment calls. Auto packages can’t explain why they arrived at their suggestions and following them would mean just as good as leaving your investments to chance.

Also, black box plans aren’t custom-built for individual traders. Always remember that people have different levels of risk tolerance, investment style preferences and theoretical backgrounds. Hence, each system should be made to fit the individual user. This is the best way to prevent frustration and losses that don’t fit a person’s ability to cope.

An ideal trading plan is then still that which is created completely for an individual trader in mind. Understandably though, this might be a difficult phase for people to jump into. If it’s too difficult for you to create your own plan, you can revise an existing system from someone else so that it fits you perfectly.

In short, a wholly automatic stock or forex trading system is not ideal if you want the best possible profits and chances of success. There is nothing out there that can help you make 100% winning decisions. If you absolutely want to get into automation, settle for products or services that permit limited options for it.


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