Automated trading is a way in which trader participates in financial markets using method which has pre-defined set rules for entering as well as exiting trades in the trade market.
Cons of Investing through Automated Trading
Automated trading works on pre-defined set of rules knowns as algorithms. With the technology, chances of failure is also there. The Investor or the trader can experience loss as well as there can be negative impact, if by any chance there is failure in the system.
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As the name Automated Trading suggests the execution will be done automatically but then also there should be monitoring else one can go through loss. As there can be system failure which includes power cuts, loss of internet, slow internet and many more. All these can result in the wrong order placement as well as in execution using selling or by buying.It also requires to have Technical knowledge about reading the charts, software management from the trader.
Pros of Investing through Automated Trading
Diversification is the one of pros of this trading.This trading technique allows used by traders for multiple strategies and accounts at once which spread the risk among all asset classes and investment instruments. This reduces the risks and also improves profit margin for the investors. There is a High Rate of Order of Execution in Automated Trading. It allows for executing in large volume of orders to the trader.With the use of automated trading, trader can do trading from multiple accounts and can also use multiple strategies during the trading parallelly. Automated trading not only ensures diversify via spreading trading risk among numerous investment instruments but also use multiple technique. The most important benefit is by using automated trading trades can be executed in fractions of seconds infact in millseconds and for the same task ant human can take several number of days to excecute the trade.
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