Is An Automated Trading System Good For You?
If you've been making investments, you have most likely already read a little about implementing an automated trading system
. Before you do this though, you need to first define this phrase and determine if it can do you any good.There are really two ways traders think when they look up automation for trading systems. The more experienced tend to think in terms of perhaps looking for key service providers that can provide some level of automation in a specific are of concern. One example is setting stop losses. A trader who is looking for a broker may specifically look for one who offers the option to pre define stop losses that immediately get triggered once the situation calls for it.
From the viewpoint of an expert investor, selected auto features in a service or tool are essential. In the example given, traders no longer need to call their brokers with an auto stop loss option enabled. In a sense this still fits the expert definition of what an automatic trading system is.
There are some neophytes however who tend to think differently. When they start looking around for auto systems, they may actually be looking for plans and packages that they can load and leave. In other words, they want a tool or blueprint that they only need to work on once, leave running and then generate good results without further human tweaking, assessment or analysis.
The second definition deserves closer scrutiny. In the first place, you should want to know if this even actually exists. The truth of the matter is that there really are some software packages that give investors this impression of complete automation. In some circles they are called 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.
The best kind of trade plan to follow is still preferably one that has been made from scratch for the trader using it. If building from scratch isn't possible for you, then the next best course of action would be to look for a pre-made plan that you can tweak according to your identity and preferences as a trader.
In summary, a fully automatic trading system is not your best bet for profits and success. There is no tool or program that can make flawless decisions for you. If you need some level of automation, it's best to settle for a service or package that does allow certain features and functions to be automated.
by: Jimmy Cox