I believe that in order to judge the true efficiency and performance of a trading system, one need to trade every set up that it offers, not just the ones that occur when you happen to be at your trading desk. If you apply an automated trading system to your trading you will be able to accurately assess your system to determine its effectiveness. Trading programs are a very effective means of eliminating errors and emotions from your Forex trading. For this reason alone, many discretionary traders moved over to automated trading programs.
Automated trading strategies are becoming increasingly popular amongst private individual Forex traders. In a recent study conducted (by IBFX) 94% of traders said that they would use the same or increase the amount of automated trading they will perform in the next twelve months. Only 6% stated that they would decrease their use of automated trading strategies. On top of that the study also showed that as of September 2010, 56% of all trading activity on the New York Stock Exchange was high frequency, or computer automated trading.
In 2004 Algorithmic trading made up a mere 4% of total Forex trading. By 2007 this figure had risen to 28% and estimates are that currently around 50% of all Forex trades are automated and these figures are expected to continue to climb rapidly. There is no doubt that automated Forex trading systems are gaining in popularity.
The main reason for this growth in automated trading is technology. As technology is a driving force in most other fast moving sectors, so it has had a huge impact on Forex trading systems? The first major step towards the development of auto trading systems was the move away from floor trading to computerised trading. Once this occurred trading firms developed their own trading systems to place orders through the new electronic exchanges.
Retail traders now have access to technology that previously was only available to these large banks and institutional trading desks. With the highly advanced trading platforms now available to individual Forex traders around the globe, they can now compete on an equal footing. As traders began to implement automation in their Forex day trading systems they soon realised the huge opportunities that they presented. Traders began to share ideas and approaches and now automation is the way of the future for individual traders.
Automated strategies will improve your performance as your auto system is able to follow more markets, more efficiently, more of the time. Manual trading is limited to the number of hours you can stay focussed in a trading day. Realising this, many long time manual traders have moved over to Forex auto trading programs.
Automated trading systems are so much more efficient as they require less human intervention and therefore less cost. Traders may only have a few hours to spend on their trading each. An auto trading system will allow part-time traders to trade full time by trading the market on their behalf. Traders then just need to monitor their systems performance. Day traders are now able to focus more on research, system improvements and keeping up with market trends rather than sitting in front of their trading screen waiting for the next set up. This serves to improve their overall performance by focussing on important issues, not merely the mundane tasks.
I believe that in order to judge the true efficiency and performance of a trading system, one need to trade every set up that it offers, not just the ones that occur when you happen to be at your trading desk. If you apply an automated trading system to your trading you will be able to accurately assess your system to determine its effectiveness. Trading programs are a very effective means of eliminating errors and emotions from your Forex trading. For this reason alone, many discretionary traders moved over to automated trading programs.
Forex auto systems have become easier to build due to the availability of universal scripting languages such as MQL4 or Ninja script. These programming languages are not difficult to grasp and once you understand them, the possibilities are endless in terms of automated trading system development. Spend some time learning how to build your own auto trading program and you will then have the skills to create multiple systems for different markets, with unique objectives and targets. Professional traders have learnt that their time better spent in development than in implementation and for this, automated trading is the answer.
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.
