Automated trading is the final step on the path of becoming a trader. If a trader is able not only to create his own trading strategy, but also to code it properly and make it workable, then his/her financial independence is guaranteed.
What is an automated trading system?
Automated trading system is a software code based on a specific trading strategy coupled with indicators and other useful tools. The system is called automated because it can operate without trader's direct interference requiring only a constant Internet connection. Everyone who has basic programming skills and the MetaTrader 4 trading platform, which includes a MQL4 integrated development environment, can create such a system.
Computation of algorithms and automation can cause some problems, so it is important to make every effort to thoroughly test the correctness of program code execution. Should we entrust our funds to the system without being confident in its profitability? For this purpose, the platform provides an opportunity to test automated trading, indicators, and Expert Advisors with an option to optimize the parameters. One of the mandatory functions of such systems is visualization of trading in order to monitor the current situation and correct possible defects. So, is it worth it to take up automated trading? Definitely it is!
Advantages and disadvantages of an automated trading system
1. No need to watch the trading platform all the time.
2. Instant orders execution after the signals are received. Ofte, the trader's reaction is slower than the computer system response, let alone the hesitation “to open or not to open the position”.
3. Increased number of trades due to 24-hour trading possibility. More deals – more potential profit.
4. Possibility of including standard and optional scripts in the code. Useful functions such as floating stop loss can be embedded in the program and executed automatically for every order.
5. Option of parameters’ optimization. However, it can be both an advantage and a disadvantage at the same time as it is effective only with appropriate monitoring and utilization.
6. 24-hour trading. Orders can be closed upon a special signal, thus protecting already gained profit.
7. Minimized human error factor. An automated trading system is not subjected to greed, anger, and other human emotions which often get in the way of successful trading.
8. Strict adherence to the chosen strategy. The program will not hesitate whether to open position or not if the signal is not confirmed or is remotely similar to the signal.
9. Trading using a system of increasing volume according to the set criteria. It is an excellent opportunity to involve a large part of your assets.
1. Absence of flexibility. It is a rather significant disadvantage because the market is unsteady, so the trading system can not gain profit if there are unforeseen fluctuations.
2. Absence of intuition. Often, many profitable trades are opened on the basis of the trader's intuition such as “I have seen it before…”.
3. Instability of optimization. Optimizing the program settings you can make high profits only at a particular time period, then the same optimization can lead to significant losses.