Automated trading is a method of participating in financial markets by using a programme that executes pre-set rules for entering and exiting trades. As the trader, you’ll combine thorough technical analysis with setting parameters for your positions, such as orders to open, trailing stops and guaranteed stops.
Automated trading refers to the use of computer programs to execute trades automatically based on predefined rules. These rules can be based on a variety of factors, including price, volume, time, and market conditions. Automated trading can be used in a variety of financial markets, including the stock market, forex market, and cryptocurrency market.
Automated trading systems, also known as algorithmic trading or black box trading, can be designed to execute trades in real-time or with a delay. They can also be designed to trade based on a variety of strategies, including trend following, momentum, and arbitrage.
There are several benefits to automated trading, including the ability to execute trades faster and more consistently than manual trading, the ability to trade 24/7, and the ability to backtest and optimize trading strategies. However, automated trading also carries certain risks, including the potential for software errors or glitches, and the potential for losses due to market conditions that the trading system is not able to anticipate.
Overall, automated trading is a tool that can be used to execute trades more efficiently and consistently, but it is important to carefully consider the risks and limitations of this approach.