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. What's the difference between an index fund and an ETF?

    Learn about the difference between an index fund and an exchange-traded fund and how index fund investing compares to value ...
  2. What commodities are not tradable?

    Learn about some of the durable and consumable goods that are not considered tradable commodities and why these goods cannot ...
  3. How does investing in the banking sector differ between the U.S. and Canada?

    Discover why some investors prefer Canadian to U.S. banks. Learn how trades of Canadian bank shares are executed in both ...
  4. Should I attempt to trade futures myself using software, or is this better left in ...

    Discover the factors to consider when deciding whether to trade futures on your own or to commit your trading decisions to ...

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