As the digital age advances with each new year, traders and investors are coming to realize the incredible power of automated trading. For those who trade anything, on a part-time or full-time basis, automated trading has the potential to free you from constant screen watching and position management. The entire concept behind automated trading is that once you create a rules-based system, along with parameters and detailed criteria for buying and selling, the algorithm takes over and simply does exactly what you have told it to do. Of course, a lot of auto trading software products are nothing more than GIGO (garbage in, garbage out) versions of ordinary decision-making apps.

Essential Facts About Automated Trading
Essential Facts About Automated Trading Pixabay

The GIGO principle is especially pertinent when you build your own automated trading program from the ground up. Keep in mind that many software products in this niche come with predefined parameters that users can tweak or just apply them on an as-is basis. If you're new to the concept of auto trading, it's essential to review key points about the process before jumping on the bandwagon and opening an account with a broker who offers the service. For starters, you'll want to learn how to build a system that meets your particular needs.

Out of the box retail products, as well as quite a few broker-provided versions of automated trading programs, don't always include features you might want or need. That's why it's imperative to learn the basics about how to build or amend a product that you are going to use for regular trade activity. It's also wise to understand the market dynamics of automated trading, which is a huge segment of the securities universe. For the vast majority of trading enthusiasts, the initial decision involves whether to build their own automated trading program, buy one and use it on their favorite platform, or simply go with the in-house version provided by the broker.

Building Your System

Don't worry, you need not be an advanced programmer to build your own auto trade robot. In fact, all you need to do is spend time planning which markets you intend to operate in, know the key features of an automated trading system that suits your needs, make a list of trading rules that guide the bot, build the program yourself or have someone do it for you, test it extensively, and then use it. Keep in mind that most of the top brokers can help you adapt one of their automated traders for your unique needs. It helps to work with the best automated trading platform in UK, the U.S., Asia, or wherever you happen to be located. In fact, some of the better online brokerage firms offer adjustable templates to account holders.

That means you need to know nothing about computer programming or coding. Instead, once you open an auto trader, you can choose from a menu of features and adjust numerical limits on things like entry prices, exit levels, stops, and limits. If you've ever worked with one of the many website builder products, then you probably already know enough to get started making your own auto trader bot. Like every other new form of technology, auto traders have their good and bad points. Though it is fair to say that the pros certainly outweigh the cons. Primarily, that's due to the fact that people who prefer to trade the old-fashioned way, simply do their own thing and stay away from robotic systems. However, for those who do opt for automatic order entry and execution, it's instructive to review the advantages and disadvantages of letting a bot do most of the legwork during a typical day's session.

No Emotional Trading

Without a doubt, the key advantage of using automated platforms is that traders can minimize the danger of letting emotions get in the way of sound decisions. Once you set the rules for entry points, stops, and other main parameters, you won't have to worry about getting a gut feeling that a given position is a winner or loser. The auto trader will simply execute the order as you instructed it to. Panic, frustration, fear, and other profit killers won't intervene to turn a good trade into a bad one.

Potential System Malfunctions

If you talk with people who use auto traders on a regular basis, a common complaint appears. Depending on which brokerage platform they use, automation traders often gripe about system downtime, outages, and malfunctions of various kinds. It's true that any automated trading-based bot can experience glitches. However, compared to just a few years ago, those errors are becoming rare. Plus, there are ways around crashes. Many trading pros, for example, use a second connected device as a backup and keep their broker's phone number handy if they need to exit a position in a hurry during an outage.


Speed is the big benefit for those who prefer letting trade bots place their orders and manage their daily account activity. Whether you deal in forex, equities, or try your luck in cryptocurrency, it's virtually impossible to follow hundreds of charts simultaneously. But robots have no trouble monitoring huge numbers of securities and applying your rules-based criteria to each one. Orders are executed with split second timing, stops are set exactly where they need to be placed, and gains or losses are limited by your instructions.


Beware of purchasing overpriced automated trading software. Unless you operate a large company that needs huge, complex arrangements for dozens of employees, the broker-provided and low-cost products on the market will get the job done. This is especially true for individuals who operate out of their homes on a part-time or full-time basis.


In addition to every account holder's ability to use a simulator and take advantage of free trials, a major benefit of auto programs is price. Most are either free, though your broker's platform, or sold at reasonable prices through hundreds of online retailers.


Some of the stand-alone products can be complex, but there's an easy workaround. If you're new to the concept of auto trading, use a broker's in-house version or work with your own simple program. For advanced and highly experienced individuals, there are several automated software products that have long learning curves and can be quite pricey.