Your trading plan running automatically through your trading software does not need to sleep and does not make mistakes. So you have 24 hours of error free, stress free trading. It’s a dream come true for retail traders who can now compete on a level playing field.
As an individual professional trader you have some fantastic advantages in the markets over institutional traders and long term investors; however you also have a number of areas where the odds are stacked against you. Two of the major stumbling blocks have been budget restrictions and limited resources.
The large institutional traders have huge budgets for research and development as well as programming and technology. Retail traders are subject to the limitations of their own time and ability. As a retail trader you rely on your own ability to trade error free and are hindered by your time restraints. You don't have the luxury of handing over your positions to your Hong Kong or London trading desks when you head off to bed. In order to succeed at trading you need to focus on your advantages and minimise the weak areas. One of the best ways of minimising the weaknesses faced by an individual trader is to incorporate automated trading into your strategy to eliminate most of the problem areas faced by independent traders.
Automated trading systems were first developed and used by large institutional market participants but with the development of advanced trading platforms available to individual traders, the world of automated trading strategies is now open to the retail trader allowing him or her to compete on an equal footing with the large banks and institutions.
Electronic trading platforms such as Ninjatrader and Metatrader, available to the retail trader to trade foreign exchange via their broker of choice, has revolutionised trading for individuals. These programs allow end users to write their own automated trading plans and Forex trading systems. You can automate trading in very much the same way as the institutional traders have been doing for some time to gain an edge over the market.
These platforms have proprietary scripting languages, which enable individual traders to develop their own scripts, indicators, money management systems and ultimately automated trading systems. Due to the fact that these languages are open source there is a large community of developers sharing systems, ideas and expert advisors with other individual traders. This sharing of ideas, research, knowledge and coding allows traders to learn and improve their trading results.
However, this still left the retail trader with the need to learn a programming language and development skills which takes many hours of learning as well as a process of trial and error. Costly errors could be made in the process especially if you are not an experienced programmer to start with. With the advances in trading software the process of developing an automated trading plan for those not experienced in programming has become significantly more user friendly. The building of your own system is also well support through modern software trading programs by allowing us to fully adjust and backtest our system before running it in a live account.
Automated trading on the Futures or Forex market is the process of running a computer derived program through your preferred trading software platform. You as the individual trader use the in-built wizards to set your trading system rules and the software will automatically execute your plan day and night as if you were sitting in front of your screens constantly. The key advantages of this are numerous.
Your trading plan running automatically through your trading software does not need to sleep and does not make mistakes. So you have 24 hours of error free, stress free trading. It’s a dream come true for retail traders who can now compete on a level playing field.
Get a Life by Automating Your Trading
After analysing this period in my trading history I discovered that although I had been making more errors, the worst thing about being so tired and anxious was the marked reduction in my ability to remain disciplined in my trading. The more tired a trader is the more difficult it is to follow his trading plan.
Be Responsible for Your Own Trading Success
All traders are unique. There is no one size fits all automated trading system. Build your system based on your beliefs about the markets and according to your trading plan. It’s also easy for the seller of the system to create an unrealistic track record through over optimisation. The system may promise success but fail hopelessly in real world conditions. Blaming the system for your failures is too easy. Take responsibility and build it yourself.
What is the Future of the Markets and How Does Automated Trading Fit In?
Regulation of financial markets is increasing as they become more complex and computer driven. This is to the advantage of small investors who require legislation to protect them from unscrupulous operators and so called insiders. A more regulated environment means a better trading experience for automated forex traders.
