In recent years, many traders use in their trading mechanical trading systems, and those who do not use, would like to know more about them. Let's face it, what is it and why we need these systems? What good is they can give a trader, and what they have drawbacks.
To begin, we define some terminology. It's funny, like in the early lead official explanation from Wikipedia, but it turns out, there is only a blank page, but no definition. Then try to define himself.
Trading system - a clearly defined set of rules for trade, ie for opening and closing positions. Similarly, the term "trading strategy". If you have a clear plan, under any circumstances enter into a transaction in and out, even if only on paper or in your head - you have a trading system. Go ahead.
Mechanical Trading System (MTS) - a program (or device, as follows from the term "mechanical"), which carries an automatic nomination and withdrawal of applications for pre-embedded in its logic, in accordance with the trading system (trading strategy). It is also possible to execute a program of additional functions to the discretion of the author's system - the control for proposals, monitoring of transactions, analysis of trade, with the provision of graphs and reports, etc. I think the word "manual" would be more appropriate to say "automatic" trading system, but because of traditions, market participants use this term.
Even there the concept of "trading adviser" or "trade expert." Trading Advisor - this is, well, semi-automatic, which collects data, analyzes them, make calculations and reports the results of a person who has obtained data on the basis of decision makers. The program Metatrader, which is used for trading on Forex, trading advisors and experts, called the program, which can not only give signals, but, if you want the trader to implement automated trading.
In recent times, to describe the mechanical trading system was to use the term "trading robot". Personally, I like that term more, it better reflects the essence and fewer letters to write.
So, we know that such a trading robot, let us now, why do you need it and what it can provide health benefits.
Pluses trading robots.
Speed. Trading robot can track dozens, hundreds of quotations of securities, to make complex calculations instantly, make decisions and then display the application. Man would not be able to quickly analyze because so much information. Traders use in its trading system, large volumes of complex calculations, entrusted trade robot get an advantage over colleagues, trading in the old-fashioned. Traders who do not use the robots are forced to reduce the number of traded instruments, used to increase the time intervals (time frames) and to abandon promising, but complex trading systems.
Accuracy. Trading robot makes no mistakes (of course if no error had crept into the program code to create it), all input and output data can be calculated to within a few decimal places, if necessary. Exhibiting robot application is not accidentally pick up an extra zero and not put a comma in the wrong place. Traders who sell hand, can sometimes make mistakes in calculations, and when fielding requests. From some of these errors can be competently designed to protect the trading terminal, but the chance for error still remains.
Trading robot is not affected by emotions. Many traders, especially beginners, "while the emotional impulse, commit the transaction, contrary to the logic of the trading system and in most cases, these transactions are unprofitable. Trading robot always strictly adhered to its logic. He does not listen to the smoking room "guru", buy-out know exactly where the money goes, he is not frightened of three consecutive losing trades, he is not a bad mood.
Trading robot never gets tired, he is ready to work 24 hours a day. You can go about their business, work, sleep, relax, and your robot will be traded. If you trade manually, do not get to 100% of time on the computer, even if the trading session on the Stock Exchange only 8 hours. To leave the computer, the trader may miss an important signal for the entry or exit and this can cause damage.
Scalability. If you want to add the functionality of your trading system, you need only add code. For example, you can get beautiful reports and graphs at any time, you can configure the alerts from the robot via SMS, can be infinitely more difficult trading strategy. Trading manually, you have to spend more of their time, if you want to expand their trade opportunities, or even to hire additional assistants or abandon expansion.
As you can see, shopping robots, give traders a great advantage, why has not everyone uses them in their trade? Is it possible that mechanical trading systems are no minuses? Yes, and very significant.
Cons trading robots.
The complexity of manufacturing the robot (writing program). You can develop an excellent trading strategy, but not be able to program it. Even if you're a programmer need to learn a new language, but if you do not understand programming, you will have even more complicated. You can order the robot to write, but you can not be sure that the programmer exactly describe the program logic of your strategy and do not tolerate mistakes, and in the future, you may have difficulty if necessary, modify the code or extend the functionality. Another option is to buy ready-made robot, but in my opinion, this is the worst scenario - firstly, you need to know exactly how your robot, and the purchase of the majority of "black boxes", and secondly, I have personally suspicious, why do authors sell "machine for making money, not earn them yourself.
Trading robot can only use technical analysis. You can not teach him to read news and company reports. The robot, in accordance with the signal, can open a position at a time when the news passed on the beginning of the depreciation.
Trading robot can not make decisions in unusual situations. He only carries inherent in the logic of it, and in case of problems will not change anything. Of course, the program can provide a robot's reaction to certain situations, but it is impossible to foresee. For example, if you lost connection to the Internet, the robot can not continue to trade or at least close an open position. Trader, who sells hand, in this case would call the broker and closed position, or restored to the Internet. The computer may stop responding, the program can be closed with an error, the broker may not accept an application or to accept, but with considerable delay. Trading robot can not respond to all events and this can lead to unexpected losses.
Lack of emotion, one of the pluses of trade robot is the same and less. The robot can, without any embarrassment to pull all your capital in one day. Keep this in mind when creating a robot, make it such an opportunity and not allow it. For example, allow the robot to trade only a part of your capital, or make sure that when you reach a certain threshold robot alert you and (or) stop trading.
Trading robot does not have the intuition and not use it in their trade. Some trading strategies based on intuition or use an intuitive approach (although personally I would not call it a strategy). For example, many scalpers make decisions, relying on their intuition. He just looked at the quotes and make a decision. Program such a strategy is impossible.
Mechanical trading systems offer new opportunities for traders to trade, giving them an advantage over traders, who trade manually. On the stock markets, Forex, or the derivatives market, trading stocks, futures or currencies - trading robot is always ready to fulfill his inherent in the program. However, using robots to automate trading, traders must not forget that robots are not perfect, it's not the machine for making money, it's just another useful tool for the trader and it should be used wisely.
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