Twenty years ago, the barriers to using automated trading software were incredibly high. Data couldn’t be transferred quickly, access to information was limited and processing times were slower. Coming to 2011, things changed, thanks to advancements in technology. It is now easy to use software and trade in the comfort of your home. This has led to the interest of people in automated trading and here are a few reasons why.

 

You can trade while you sleep

 

With trading software, you don’t need to stay glued on your laptop’s screen at the wee hours of the night. Automated trading allows people to participate in the market as they do other things or as they sleep.

 

Backtest the results

 

It is not easy to backtest a trading strategy. This is not a problem with good trading software. Many platforms allow the user to backtest strategies without incurring any costs.

 

Overcoming the challenges of trading

 

Traders face a challenge of deciding when to initiate a trade. For those people who have had struggles in the past but have never mastered the courage of initiating a trade on their own, an automated system can give them an alternative to a suitable market that they would not have considered.

 

Diversify

 

A lot of traders like running systems as they simultaneously place trades on their own. You can allow a system to trade for you instead of avoiding volatile pairs.

 

No time for trading

 

Some people like trading, but they don’t have time for it because they have to run other errands. With automated trading software, you don’t have to stress. You can use software to participate in trading even if you don’t have time for it. The market comes with an unmatched amount of leverage, and this means that even small movements can result in significant losses or gains.

Nowadays, succeeding in the stock market is most probably only when you use algorithmic trading software and strategies. The stock market is so much of a volatile investment vehicle that all investors have to think twice before jumping in.

Nowadays, succeeding in the stock market is most probably only when you use algorithmic trading software and strategies. The stock market is so much of a volatile investment vehicle that all investors have to think twice before jumping in. Having said that, it also happens to be the most lucrative means of boosting your investment as it’s possible to earn three times your investment capital minus all administrative and other fees.

Nevertheless, mastering the market needs understanding and patience concerning how the market actually works. With lots of individuals interested in the market but not willing to quit their everyday jobs, online investing becomes a viable option to be considered. Algorithmic trading is a strategy that’s famous which several online firms use in making trading decisions.

Algorithmic trading

This involves the utilization of computer software which uses algorithmic programs to recognize potential buys. Several and varying online investment firms use such algorithmic strategies and software to execute trades. Basic arbitrage is only one among the strategies that utilize data such as interest rates to seek all inefficiencies in the market. The utilization of benchmarking, icebergs, transaction cost reductions, and gaming is another strategy.

High-frequency trading

One of the most popular algorithmic trading strategies or methods is HFC (high-frequency trading) which, is widely employed for use by most of the foremost trading firms. The foremost trading software or stock trading software will utilize computer algorithms to either move in or move out of stock market positions within a matter of only a few seconds thereby earning truly high returns for the firms that employ and use it. HFT utilizes many different arbitrages that include ticker taper trading, market making, statistical, low, events, or news-based latency.

Advantages of algorithmic trading

One of the foremost benefits of this type of trading is the time it saves and the trading convenience it offers. As the global financial market gets bombarded with millions upon millions of information, it will require a great deal of time to process that much information. This prevents traders from quickly arriving at necessary decisions thus losing lots of great opportunities. With these platforms, the computer software utilizes several and varying algorithmic processes to eliminate and filter out the unnecessary or invaluable parts of the information and, concentrates on only those ones that are greatly important. Since this process needs just a couple of seconds to be completed, traders can then easily and conveniently spot and identify great opportunities and make much better trading decisions.

Elimination of emotional impact

This is one other benefit. Since emotions play havoc with the decision of traders, greed or the fear of losing capital could directly influence the outcome of a trader’s trading decision. Using trading platforms ensures that decisions are made based on factual data enabling traders to reap profits rather than loses. Traders also get an edge over competitors particularly those still depending on old market strategies.

 If you want to learn more about algorithmic trading software and strategies, you can always visit the websites of the foremost trading companies or platforms like the one that was mentioned in this article.