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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.

Strengths

  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.

Weaknesses

  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.

 

 

 

How can automated trading affect the stock market?

The lure of the stock market is hard to resist for the novice and for the expert. The sheer experience of adrenaline rushing through your system as your brain works at breakneck speed to assimilate all the data, numbers and the possible repercussions is hard to beat. While that is the typical scenario in any stock exchange, with the advent of automated trading robots things have changed.

The dependency on automated trading systems has led to quieter floors with software and computer dealing in trillions of dollars every single day. Algorithms have started deciding how a day at the stock market will unfold. The ability of these inhuman machines is their speed to analyze and react to the opportunities that are constantly changing in the trading world. In fact, the dependency on these machines is so much that it is believed that more than half of the Sand P 500 companies trade using algorithms. On the flip side, the speed at which these machines trade often leaves many traders high and dry as they do not have time to react.

While there is no doubt that no human can match the speed of the robot traders it has been seen time and again that complete reliance on these automated systems can prove to be disastrous. Since these systems work on preprogrammed signals whenever the prerequisite is met in any stocks or bonds the systems will start trading which can lead to a freefall in the market. For example, if Dow Jones falls by 3% a particular system will be triggered to sell. The problem happens when several automated systems enter the stop loss criteria the market will be hit in a significant manner. In fact, it is believed that the recent vagaries in the market were the result of algorithm trading.

Analysts have stated that it must be the work of the machines because people don’t liquidate stocks so rapidly; they analyze and then take action.

While trading robots do have their drawbacks there is no denying that they are the future and we have to learn to deal with them like we are learning to accept the digital currency like bitcoin and Ethereum into our daily lives. In case, you want to try your luck in crypto trading then check out Crypto VIP Club. Is it a scam if you ask, you must find out for yourself after reading the review because in this field trust no one but yourself.

 

 

Simple Energy Resources Trading Related Terminologies

These powerful terms are a clear-cut indication of the effectiveness of energy resource trading and include

  • Sleeving: This is a transaction means by which a hostage party conducts the indirect type of trading with another party, who is unknown and cannot be fully trusted for doing trading. In such cases, an intermediate party is included by the hostage group, which has a good reputation, to conduct trade with the other party.
  • Allowance trading: This kind of trading is the center of attraction piece for the acid rain programs because these allowances are the currency received to purchase or trade almost all kind of sources related to the Sulphur dioxide emission. They do have a well-established and authorized unit with a utility factor to emit a limited ton of sulphur dioxide per year and can sell these products through trading. Further, they mount this trading money for purchasing more sulphur coals to generate more dioxide of sulphur and the process continues.
  • Flash-spread: This generally indicates the difference of price between the rate at which the generated electricity is sold by the concerned personnel and the quantity fuel of fuel used for generating this energy, accounted for equivalent units. Additionally, these are represented in terms of US dollars per Mega Watt hour. The flash-spread is obtained as the product of gas price and heat rate and dividing it by a thousand and reducing the respective electricity price from the obtained result.
  • Specific associated risk: This is the market risk involved in the security price which is always related to an individuals’ stock price market.
  • The process of speculation: This is regarded as a process opposite to the speculation means.
  • Spinning and non-spinning reserve: Spinning reserve can be described as the back-up of energy kept behind the energy production unit that is further made available to the long transmission distribution systems with a give notice period and with this power they continue to operate continuously for say two hours. On the other hand, the non-spinning reserve unit keeps on generating energy quantity that is brought online within ten minutes of offline work. They can be either operated or interrupted in between a minimum of two hours.
  • The real existing market: The Spot market type that is indeed a real-time commodity market set up for quick sale and distribution of energy and usually represent the well-flourished market for the natural gas generated while operating on a specific time period varying from a scale of days to week and for electricity where the scale matters to be as small as the case of a few minutes. The spot chosen for marketplace vary depending on the energy to be sold and the corresponding Ethereum Code trading infrastructure supports and even they exist online.