What Is an Automated Trading System?

Automated Trading

Automated trading systems, also known as system trading, algorithmic trading, or mechanical trading systems, enable traders to establish certain guidelines for both trade entries and exits such that once preset, they can be automatically implemented using a computer.

In fact, various platforms reveal that at least 70% of shares traded on U.S stock exchanges are executed using automatic trading systems. In addition, traders can open auto trader accounts on platforms and transform trade entry and exit rules into automated trading systems that will enable computers to implement and monitor trades on their behalf.

One of the biggest appeals of having automated trading rules is that it can remove some of the emotion from trading operations because trades are automatically implemented once a specific criterion is met.

These trade entry and exit guidelines can be founded on simple conditions such as M.A. (moving average) crossover, or they could be complex strategies that require an in-depth understanding of programming languages. Let’s look at how to establish trading rules, how you can avoid scam trading systems, and what to do before you automate your trading strategy.

How Do You Establish Trading Rules?

Some automated trading platforms have “wizards” that traders can use to pick technical indicators, which they can use to establish a set of trading rules. From this point, these trading rules can be automatically traded.

For instance, you can input the kind of order (market or limit) and when the trade will be triggered. You can also use the default inputs on the trading platform. However, many traders choose to build their own trading indicators and strategies. They usually work closely with programmers to develop these indicators and strategies.

Although this necessitates more effort compared to using a platform’s wizard, it gives traders more flexibility, and the outcomes can be more rewarding, as the one as the Malaysian broker Juno Markets. But, unfortunately, there is no trading strategy, whether default or custom, that can guarantee success.

Once the rules have been established, a computer will check the markets to find buy or sell prospects based on the specs of the trading strategy. This immediate order entry can be the difference between a slight loss and a catastrophic one in fast-moving markets if the trade happens to go against the trader.

How Can You Avoid Fraudulent Automatic Trading Platforms?

As you search for the perfect automatic trading platform, always remember if it seems too good to be true, then it probably is. Unfortunately, there are plenty of scams in the market. So how can you determine if the automatic trading system is real or fake?

  1. 1. Start by scrutinizing any amount you’re required to pay for the trading account. If you don’t ask questions, you might end up losing cash in the long run.
  2. 2. Conduct research and ensure that you understand all aspects of the system you’ve chosen. Try and go through the terms and conditions before making commitments.
  3. 3. Check online for reviews about the trading system you’ve chosen
  4. 4. Most scam automated trading platforms don’t have trial periods, so be on the lookout

Prior to Automating Your Trading Strategy:

  1. 1. Start by asking yourself should be using an automated trading system. Of course, you’re guaranteed to make money, but it can take longer than you think. So you need to determine if you’re better off trading manually.
  2. 2. Understand what you’re getting yourself into. Ensure you recognize the ins and outs of the system. Keep your strategies and goals simple prior to turning to more complex trading systems such as the automated kind.
  3. 3. Remember, there isn’t a one-size-fits-all automated trading system. You’ll need to consider your preferred trading strategy and your end goals. Then you can find the ideal automated trading system for your trading strategy.

Final Thought


To sum it all up, automated trading systems are very appealing, but you shouldn’t consider them as substitutes for carefully executed trading strategies. Understand that tech failures can occur, and as such, these systems need to be constantly monitored.

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