Creating Automated Trading Systems Using Interactive Brokers: Why Automated Trading
  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. Automated Forex Trading

    A method of trading foreign currencies with a computer program ...
  2. Currency Day Trading System

    A set of analyses that the forex day trader uses to determine ...
  3. Branch Automation

    Form of banking automation that connects the customer service ...
  4. Forex System Trading

    A method of trading forex that is based on a series of analyses ...
  5. Forex Signal System

    A set of analyses that a forex trader uses to determine whether ...
  6. Manual Trading

    A trading system that involves human decision-making for entering ...
RELATED FAQS
  1. How do quant traders build the relative strength index (RSI) into their algorithms?

    Learn how quantitative traders build the relative strength index (RSI) into their algorithms. Explore how automated trading ... Read Answer >>
  2. How do I know how much of my income should be discretionary?

    Understand the difference between discretionary income and disposable income. Learn how much of a person's income should ... Read Answer >>
  3. How does automated work affect structural unemployment rates?

    Learn about structural unemployment, one of the main causes of structural unemployment, and how automated work increases ... Read Answer >>
  4. Why do economists think it is important to track discretionary income?

    Learn about the importance of discretionary income to economists, particularly for economists who emphasize consumer spending ... Read Answer >>
  5. What is the best method of analysis for forex trading?

    Types Of Analysis Used In ForexForex analysis is used by the retail forex day trader to determine whether to buy or sell ... Read Answer >>
  6. 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 ... Read Answer >>

You May Also Like

Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center