Why Automated Trading Systems Never Work?

Why Automated Trading Systems Never Work?

As a trader, I am quite sure that you have heard about automated trading systems. They usually come with big claims of profits in just few clicks to set them up. Have you ever wonder (if you have not been using any) that if they work or not?

In this article, I am going to share you some reasons that will help you answering the question "Do automated trading systems work or not?"

The first reason why automated systems never work is because markets always change. The systems may look good at some periods or some situations but they never work in long run.

Another reason is because the automated systems generally come as black box. Developers do not want you to see what are behind the system. They just claim that you will get big bucks if you buy their systems. Also they will show you the results of the systems based on historical data. That is not enough! The historical performance cannot guarantee the future.

I have always mentioned about complete trading systems. A complete system must consist of rules for entry, exit, stop-loss and money management. Some automated systems may consist of these components but they will still not work if they are black box.

In real trading, you need white box systems that you can tune them to be suitable for market conditions. Furthermore, you have to know what are reasons behind each trade, where and why do you enter a trade, how your exit and stop are placed. How your money is managed.

Think about this, if the developers of the systems can take profits in trading using their systems as they claim, why are they making money by selling their systems? If it was you, do you want to share your secret with others?

The fact is there is no secret in trading. It mostly depends on your mind. Some successful traders use only basic indicators in their trading. Also, traders who are using the same system may get the different results.

So the bottom line is: instead of fully automated trading systems, you better use semi-automated trading systems. Learn and adjust your trading systems then let they gain you profits. However, do not forget to do back-test for the systems before using them.

A benefit of the automated trading system is they execute a trade based on the system. It requires less control of your mind.

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