Creating Automated Trading Systems Using Interactive Brokers: Why Automated Trading
AAA
  1. Creating Automated Trading Systems Using Interactive Brokers: Introduction
  2. Creating Automated Trading Systems Using Interactive Brokers: Why Automated Trading
  3. Creating Automated Trading Systems Using Interactive Brokers: Automated Trading With Interactive Brokers

Creating Automated Trading Systems Using Interactive Brokers: Why Automated Trading

In fully automated trading, or system trading, traders develop specific rules for trade entries and exits that allow the computer to perform the order entry functions. Trade rules can vary from simple criteria, such as a moving average crossover, to complex custom strategies that require elegant programming. Automated trading requires software that is linked to a broker so that the signals can be automatically submitted and filled.

By comparison, discretionary traders make decisions based on current market conditions, using discretion (thus the name) to decide whether to enter/exit trades. Automated trading boasts a number of significant advantages over discretionary trading. Perhaps the most important advantage is that automation removes much of the emotion from trading. Once the system is set up, the platform handles all trade entries and exits, leaving the trader to follow the rules rather than second-guess or hesitate.

Another advantage is that automated trading eliminates the potential for costly pilot error mistakes. Unlike a discretionary trader who might accidentally hit the "buy" button instead of "sell," or who might enter 1000 shares instead of 100, the computer will not make mistakes as long as the system has been developed and programmed correctly.

Finally, automated trading enables levels of speed, precision and accuracy that many traders would find impossible in discretionary trading. All of these factors have made automated trading a popular option among individual and institutional traders.

Creating Automated Trading Systems Using Interactive Brokers: Automated Trading With Interactive Brokers

  1. Creating Automated Trading Systems Using Interactive Brokers: Introduction
  2. Creating Automated Trading Systems Using Interactive Brokers: Why Automated Trading
  3. Creating Automated Trading Systems Using Interactive Brokers: Automated Trading With Interactive Brokers
RELATED TERMS
  1. Paper Trade

    Using simulated trading to practice buying and selling securities ...
  2. Ring Trading

    The method by which certain types of investment business is conducted ...
  3. Demo Account

    A trading account that allows an investor to review and test ...
  4. Application Programming Interface - API

    An interface or "go-between" that enables a software program ...
  5. Mobile Trading

    The use of wireless technology in securities trading. Mobile ...
  6. Trading Software

    Computer programs that facilitate trading of financial products ...
  1. How do I implement a Forex Signal System into a forex trading strategy?

    Learn how traders use different types of forex signal systems such as trend-based or range-based to create or supplement ...
  2. How do you know if a trade placed to a broker is confirmed?

    Learn how to check if trades placed with brokers online or over the telephone have been filled and confirmed. Explore different ...
  3. Why does after-hours trading (AHT) exist?

    The advent of the Internet and electronic information exchanges has opened financial market trading to millions of investors ...
  4. What should I look for when choosing a forex trading platform?

    A trading platform is a piece of software that acts as a conduit for information between a trader and a broker. A trading ...

You May Also Like

Related Tutorials
  1. Trading Systems & Software

    Beginner's Guide To J-Trader

  2. Trading Systems & Software

    Beginner's Guide To CQG Integrated Client Trading Platform

  3. Trading Systems & Software

    Guide To Smartphone Forex Apps

  4. Trading Systems & Software

    Automated Trading with MultiCharts

  5. Brokers

    How To Place A Trade With Thinkorswim

Trading Center