subject: Advantages of Automated Trading Systems over Humans [print this page] Advantages of Automated Trading Systems over Humans
Automated Trading Systems are frequently used to assist financial traders. They operate by looking at a variety of market factors and determining how to trade. They can interpret when the right time to trade is and are generally successful. They have many advantages over individual human traders.
Automated Trading Systems can watch a variety of trading markets, something that just isn't possible by humans to the same degree. The amount of markets a human can watch is limited as they can't look at everything and can't analyse 24/7. Automated system are able to do this therefore meaning users are able to trade within a larger variety of markets.
In many aspects of life humans are sometimes guilty of making emotional decisions that are not actually the best decisions. They may have preferences as to which markets they trade in. This might be based on their own knowledge meaning they are able to interpret some markets more than others. Nobody can be an expert in every potential market. A benefit of using algorithmic trading technology is that they are able to look at such a variety of markets and then trade on the ones which offer the most favourable market conditions. A human may make a decision based on a gut feeling and this may prove to be their downfall but this just isn't a factor with an automated trading system. It will only make a decision on a genuine factor.
As well as watching many different markets, trading systems are also able to take everything into consideration. The human brain can only take on board a certain amount of information and therefore they can't consider every single factor. A human will try to prioritise with what they deem to be the most important factors but there can be things that they overlook. Automated trading systems are able to look at everything. As well as not looking at everything humans can also be guilty of looking too deeply into things and making decisions based on something that isn't important. Automated systems will consider everything that is important but nothing that isn't important. They will take the right things into consideration and base each factor on its likely importance. Human's might over value or under value things. All humans are prone to error but as automated systems are computerised they won't miss something important.
Another positive of automated trading systems is that they don't just help trading professionals buy also those who are not trading experts. It allows those to trade who wouldn't otherwise be able to. Professional traders, though, are also able to benefit due to the reasons stated above. It will help them by interpreting the right times to trade and the right markets to trade in. Whether an expert professional trader, or a novice, automated trading systems can help people and businesses to trade more successfully.
