Automated Trading System - Should You Use One?
If you've been in the trading scene for some time, you would have no doubt come across some automated trading system information. Resist the urge to dive into one right away. You need a clear idea of what it is first and if it's good for you.
Before anything else, take note that traders define automation differently when they apply the term to trade plans. Investors who have been in the markets for a very long time would most likely be in search of services or tools that can automate only a portion of their trading approach or plan. The best example for this is an auto feature for stop losses. The automatic feature here is the instant trigger of stop loss orders under specific conditions.
For many expert traders, auto functions are quite vital and definitely play a big part in ensuring success. As shown in the abovementioned example, an auto stop loss function does not rely on the trader's ability to get in touch with his broker. Even without having to make a call, this automatic trading system feature can kick in.
A number of other traders tend to think in different lines. What they mean by automation is a system, plan or package that can run completely on its own after the initial set-up process has been completed. In short, they don't really want to spend a lot of time and effort toiling on data interpretation and analysis. They want a tool or program to do all the work for them and they just have to wait for results.
This second concept of automation should be dissected further. The first step is to determine if there is such a thing. In reality, there are a number of different software products that come very close to complete automation. These highly attractive options are what are more popularly known as 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.
Moreover, black box systems are not made to fit every single individual. Bear in mind that people aren't all the same when it comes to risk level tolerance, investment preferences and psychology. This means that systems should really be made as fitting to individuals as possible. This is the only way you can manage losses according to what you can withstand.
An ideal trading plan is then still that which is created completely for an individual trader in mind. Understandably though, this might be a difficult phase for people to jump into. If it's too difficult for you to create your own plan, you can revise an existing system from someone else so that it fits you perfectly.
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.
Article Source: FxTradingStock.com
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Looking For The Ultimate Options Trading System? Discover It At http://www.ultimate-trading-systems.com.
by: Reece Mathews
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Word Count: 575
Date: Sat, 22 Jan 2011
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