Strengths & Weaknesses of Automated Trading

Did you know that more than three-quarters of the stock shares that are traded on the American exchanges have its origin from the fully automatic trading systems? Automated trading systems are excellent tools wherein you can simply watch your money roll while you utilize that time for other productive purposes and await results. The automated trading software begins to execute trades on your behalf once it is programmed.

Automated trading systems are known by different alternative terms such as system trading, algorithmic trading, expert advisors (EAs), and even mechanical trading systems. Although it is known by many names, it has a single purpose of allowing traders to create specific rules that serve as inputs for every trade entry and exit. There are several automated trading robots that you can rely on for executing your trades such as the Bitcoin Loophole.

Here is a look at the different strengths and weaknesses of an automated trading system that will enlighten you more about this tool.


  1. Automated trading systems operate based on predefined rules and hence there is no scope for the intervention of any human emotions that can prevent it from taking any rash/feelings-based decisions.
  2. Additionally, automated trading systems are inbuilt with a back-testing capability that allows users to test their strategies and trading rules using historical data even before they bet their money on real-time trading activities, thus preventing loss of money and allowing you to perfect your trading skills and strategies.
  3. Moreover, automated trading systems respond immediately to market changes, thus operates with great speed, which is required to seize every profitable opportunity.
  4. In addition, consistency is maintained while trading using automated trading software and does not link to any emotional feelings of the past win or loss history.
  5. Further, automated trading systems help an age-old trader to generate greater assured profits by allowing him/her to perfect the winning trade strategy.
  6. Lastly, automated trading systems provide traders with diversity by allowing them to open multiple accounts where they can trade using different winning strategies. This also spreads the risk evenly to different instruments.


  1. Although automated trading software allows you to sit back and relax, some amount of manual monitoring is required in order to avert disasters that can arise out of missing trades, duplicated entries, connectivity issues, computer crashes, or any unpredictable market anomalies. At times even the best system can go rogue due to unpredictable market conditions.
  2. Sometimes a well-planned strategy will result in great profits online. However, if the same is applied to a live market, you may find the same strategy to fail miserably. Hence, it is always advised to trade with only what you can afford to lose.
  3. An automated trading system is a machine that constantly needs to be updated in order to stay ahead of the evolving market conditions. Therefore, you will need to rely on experts to update your software as per changing markets or else you will lose miserably.