6 Things You Should Know About Automated Trading Platforms

Automated trading platforms are computer software programs that allow traders to set rules and employ algorithms to automatically make trades on financial markets. These platforms often offer additional tools for technical analysis, charting, market sentiment identification, trade management, back-testing engines, and more, but here are 6 things you probably didn’t know.

1. It serves as your personal portfolio manager

Automated trading platforms take many of the manual actions and decisions out of your hands, including trade executions. The system automatically places trades based on signals it receives from technical indicators or external data points such as economic numbers or news events. The platform also keeps track of profit and loss (P&L) and other metrics essential to managing a portfolio. You can try https://www.optionsroad.com/ which enables you to spend more time doing the activities you enjoy with the people who matter most. Using this, traders can effectively outsource the task of managing a portfolio to a computer program, freeing up time to focus on other areas of their trading business.

2. It can help you identify new opportunities

Not only does an automated trading platform manage your existing positions, it can also help you uncover new opportunities on the market. Some of these programs make use of sophisticated search algorithms to continuously scan markets for price discrepancies. When the system identifies a profitable trade, it automatically places orders in real-time with no intervention from the trader. This can reduce or eliminate the research time required to identify new trades, and it allows traders to be more nimble and react quickly to market opportunities.

3. It provides objective analysis

Automated traders are known for incorporating numerous third-party data feeds into their analysis, including technical indicators, sentiment gauges, news reports, and macroeconomic announcements. The software then evaluates this information in conjunction with current market prices to generate buy or sell signals. This makes it possible to identify opportunities based on relevant factors that aren’t always reflected in market prices alone. As a result, automated trading can provide an objective and unbiased analysis of the markets that can be difficult to replicate by hand.

4. It can automate your risk management

If you’ve ever been stopped out of a trade early because your stop-loss was too close to the breakeven price, automated trading may be for you. Rather than rely on pre-set stop-losses, many automated systems allow traders to set their own custom thresholds based on the target price plus slippage and commission costs. This ensures that stop losses are both more accurate and wider, in order to give the system enough room to execute them without triggering a premature exit from a trade.

5. It offers flexibility and convenience

Automated trading platforms offer traders a high degree of flexibility and convenience. Orders can be placed and modified in real-time, and many platforms offer a wide range of order types to accommodate a variety of trading strategies. In addition, most platforms are web-based, so they can be accessed from anywhere with an internet connection. This makes it possible to trade on the go or from the comfort of your own home.

6. It can help you improve your trading skills

Even if you don’t plan to use an automated trading platform for live trades, many platforms offer powerful back-testing engines that allow traders to test their strategies in historical market data. This can be a valuable tool for refining and optimizing trading strategies before risking any live capital. In addition, many platforms offer social trading features that allow traders to follow and mimic the trades of other successful traders. This can be a great way to learn new techniques and gain insights into how other traders are successfully navigating the markets.

There are a number of reasons why automated trading platforms are so popular among traders. Perhaps the most compelling reason is that they offer a number of advantages that can be difficult to replicate with manual trading. Automated systems are known for their accuracy, objectivity, and flexibility, and they can help traders improve their trading skills while reducing the amount of time needed to manage a portfolio. In addition, automated trading platforms are convenient and easy to use, making them a great choice for traders of all experience levels. Thanks for reading!

Can anyone use them?

While automated trading platforms offer a number of advantages, they are not the right choice for everyone. Some traders may find that they are not comfortable relinquishing control of their trades to a computer program. In addition, automated trading systems can be complex and may require a significant amount of learning in order to use them effectively. However, for traders who are looking for an edge in today’s competitive markets, automated trading platforms can be an invaluable tool. 

There you have it: six things you should know about automated trading platforms. By understanding the benefits they offer, you can make an informed decision about whether this type of tool is right for you. Thanks for reading!

Dragan Sutevski

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan