What Are The Pros And Cons Of Automated Trading In 2020



Thanks to evolving technology that has dominated our lives over the last few years, we have all kinds of bots that help us with the work, and recreation.

Today, the virtual assistant can perform various actions. After listening to wake up, you just tell them your commands such as turning lights on or off, answer questions, play music, place online orders, etc.

We even have a self-driving car and applications that have made our lives in a way much more easily and efficiently. Of course, the trading system will not be an exception to technological developments.

It has been the dream of many to own a perfect automated trading system that can guarantee profits while requiring little input from the vendors themselves.

While there are many automated trading systems available today, there are some burning questions that need to be answered.

So, what are the pros and cons of automated trading systems like that?

What Is An Automated Trading System?

Before I get into the pros and cons of trading technology, let us break down what it actually means and what it does.

Traders can now enjoy this automated trading system (ATS for short), which is essentially a digital program that creates automatic orders and submit them to the center of the market or exchange.

Through this system, the order will automatically be based on a standard set of rules using the trading strategy. It often depends on technical analysis, but also can be based on input from other electronic sources.

automated trading systems usually require the use of software related to the direct access brokerage, and any special rules should be written in a proprietary language that platform. The current computer can run faster than us humans, and in most cases with fewer errors.


The Forex industry is one of the leading markets when it comes to trade. Especially if you are a beginner you should know that the stock comes with risks, and strongly suggested that “you do your own homework” before you actually start investing.

Such systems are typically used in the auto market centers, including electronic communication networks, “dark pools”, and the automatic exchange. Below should be a good start to familiarize themselves with the pros and cons of automated trading systems offered in the Forex.

To begin with, it is a big plus that the investor of experience can access this system. For example, in the TopAsiaFX site, you can find a number of educational articles, and it is an impressive broker globally.

This can work well for beginners as well as experienced traders, and their MT4 Expert Advisors allows a high degree of automation of trade. So, whether you’re a beginner or a professional, you may find this option very helpful when trading.

They also offer free demo models, so users can familiarize themselves with the program before using it on their live trading account. Also, because the system will automatically execute your trades as instructed, this eliminates the emotional factor when trading.

Famous Warren Buffett has said, “If you can not control your emotions, you can not control your money.” Continuing, as mentioned above, the computer responds more quickly than humans run the command.

This is very useful and important when trading, such as the time is literally money in this case. Sign in or out of the trade a few seconds earlier can make a huge difference in the outcome of this trade.

After the position is entered, all other orders are automatically created, including a protective stop-loss and profit target.

Additionally, discipline is key when trading. This is because emotions can be detrimental to investment, discipline is often affected.

The fear of losing, or not taking the initiative, can potentially harm your investment. automated trading helps avoid these problems, and ensure that discipline is maintained for a trading plan will be followed exactly.


The theory behind this system is that you want your program commands automatically, and technology will take care of the rest.

Unfortunately, however, there are also some important disadvantages when it comes to automated trading systems.

First, these systems rely solely on technology. Depending on the trading platform, the trading sequence could actually be on the computer and not the server.

You may not consider this a weakness at first, but imagine if your internet connection fails for some reason, so that can not be delivered on schedule.

There could also be the difference between the so-called hypothetical trade generated by the strategy, and the entry platform component that turns into real trade.

This brings us to the next disadvantage, which is monitoring.

Although it sounds amazing that you can turn on your computer and let the trade run smoothly through the system, trading requires frequent monitoring.

This is due to the potential for mechanical failures, such as connectivity problems, computer crashes or power loss, and custom systems.

If you monitor the system, there are fewer chances for things totally wrong. Last but not least, the automated trading system is often claimed to be very reliable and trustworthy.

We strongly recommend testing and practicing before you believe the system is 100%. Unfortunately, when it comes to automated trading systems many third-party solutions fail to live up to their promises.

An example of what can happen when automated trading systems make mistakes is that the cost of Knight Capital in excess of $ 440 million in the back half an hour in August 2011.

The Company recognized a loss on the new software quickly bought and sold millions of shares in more than one hundred different companies after the market opened.

They trade pushed up the value of the company in question, which led to Knight Capital suffering losses when they came to resell the shares are now overvalued.

Another example is that of the Flash Crash of 2010 when according to The Guardian, the US Wall Street hit by mounting concerns about Greece’s debt crisis.

The euro fell against the dollar and the yen, but despite a turbulent start to the trading day, no one expected that close to 1,000-point dive in stock prices.

Within minutes, the Dow Jones lost almost 9% of its value in the sequence of events that quickly became known as the “flash crash”.

Hundreds of billions of dollars wiped off share prices of household name companies such as Procter & Gamble and General Electric.

Dominating The World Trade

After reading this article, I really hope that now you can answer questions such as: what is automated trading? The majority of traders should expect a learning curve when using automatic trading systems.

It is best to familiarize yourself first and start trading with a small size until you feel more comfortable. Take your time to experience the different automated trading system, until you find one that suits you.

Mechanical failures can occur and the system requires frequent monitoring. The server-based platform may provide a solution for traders who want to reduce the risk of mechanical failure.

It is recommended by many professional traders, however, to use a hybrid approach, consisting of manual and automated trading to achieve the best results.

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