Do Autotrading Systems Work?
Autotrading system are being hyped up today more than maybe any other investment strategy, especially in the world of Forex and stocks.
The odds are pretty good that you’ve come across at least a few dozen advertisements for different autotrading systems, promising the moon and the stars when it comes to “autopilot income” and “automatic wealth”.
Every company guarantees that they – and only they – have the right kind of technology, the right kind of algorithms, and the right kind of insider information that separates the autotrading platform from the rest of the pack. Some of them have fantastic track records and others are a little bit spottier, but at the end of the day many of these companies aren’t stretching the truth “too far” when they make these marketing promises.
The reality of autotrading in the world of Forex and stocks is that it can be both a great thing and a nightmare, and sometimes both at the exact same time.
If you’re serious about automating at least some of your investment strategies, however, you’re going to want to figure out pretty quickly whether or not this is a path to success or financial devastation.
Let’s dig in a little deeper!
What exactly are automated trading systems to begin with?
Sometimes you’re going to see autotrading platforms described as Automated Trading Systems, Mechanical Trading Systems, Algorithmic Trading Systems, or just “system trading strategies”.
At the end of the day, all of these different monikers are attached to the same fundamental trading principles – essentially allowing individual investors like yourself to set a handful of rules and parameters for trades to be executed, and then allowing a piece of software to handle all of the heavy lifting for you from there.
Trade entry and exit rule can be defined based on all different kinds of conditions, dependent upon the specific datasets that the autotrading platform you are using leverage. Obviously, these kinds of trading tools need to be plugged in to a lightning fast internet connection almost around-the-clock (at least during market hours in stock trading, but 24/7 in the world of Forex for sure) – but that’s become a lot less of a problem these days than ever before.
Many of the more “entry-level” autotrading platforms set you up with built-in trading rules that allow you to even further automate the entire process. These “Wizards” come with preset and prebuilt trade entry and exit rule that will execute on the fly according to that same data set we mentioned above, and can help even the newest investor take advantage of some pretty savvy and veteran investment strategies without any real expert knowledge at all.
The advantages of autotrading
Right out of the gate, the biggest advantage of autotrading is that you don’t have to personally watch every single aspect of every single market you are investing in.
Instead, you will be relying on infallible software to do the watching for you, executing trades the second the digital little algorithms detect the market conditions you have set entry and exit rules for.
Secondly, you don’t have to allow any emotion whatsoever to dictate your trading strategies.
Any seasoned investor understands that emotions will get the best of you at one point or another when your trading in the Forex or stock markets, and the more you can do to mitigate the impact of emotion on your trade – allowing logic to rule the day – the better off you are going to be.
Software has no emotion whatsoever, a huge advantage for autotrading systems.
Built-in discipline is another major bonus when you decide to use Forex and stock autotrading systems. Once you define your entry and exit rules they are essentially carved in stone until you decide to shake things up, but the system will continue to execute trades based on your established rules until that point in time.
You need zero personal discipline whatsoever to be the most disciplined investor with these kinds of tools.
The disadvantages of autotrading
It would be nice if every single piece of software in the autotrading world had a 100% guaranteed uptime with absolutely zero bugs that might hijack a trade or two – or miss out on a dozen or more opportunities every now and again – but that’s just not the reality of the situation.
Automated trading tools are very sophisticated solutions to be sure, but they aren’t yet infallible. That’s just something you’re going to have to live with should you choose to go down this road.
It’s also important that you at least passively monitor your Forex and stock autotrading systems. You’ll want to get out ahead of any issues, you’ll want to make sure that your connection is always secure and active, and you’ll need to make sure that your system is behaving the way that you outlined in advance.
At the end of the day, autotrading tools for those looking to invest in the world of Forex and in the world of stocks are as sophisticated as they have ever been and are only going to get better as time goes on.
If you have the time to handle all of your individually executed trades the appeal for autotrading solutions may not be all that large. But if you’d like to “set it and forget” your investment strategies for the most part, you can’t go wrong with a top-tier autotrading platform with a proven track record for success.