Pros and Cons of Automated Trading Systems


Automated trading systems, also known as algorithmic trading, allow traders the ease to buy and sell orders through a computer program that submits these orders to a market center or exchange. The history can be traced back to 1949 and it has today become more common than ever, as technology has improved over the years, thereby giving room to more automated trading systems.

These trading systems allow users to build a set of rules with the technical indicators already available in the software. With the rules in place, the computer program can automatically buy or sell opportunities based on the trader’s preference.

Pros1. Objectivity

Emotions play a huge role in influencing investment or trading decisions. This is because in most cases, the market is volatile and as the prices remain unpredictable, many people are more likely to buy or sell based on emotions. However, with an t trading system, your emotions won’t have to come first, as you can easily buy and sell based on the data available and the set of rules you have put in place. With emotions in check, you can focus on more important things to help you reach your financial goal.

2. Speed and Accuracy

One rule to getting the most of the trades is to stay up-to-date with recent news and trends to help you know the best time to buy or sell. However, you can’t always be accurate or respond immediately compared to an automated program. An automated trading system doesn’t have to be constantly monitored to do what’s expected of it. It monitors the market in your place and tracks trading opportunities in real-time. This makes it faster and more accurate than when it is done manually.

3. Discipline

It is sometimes difficult to stay disciplined when your emotions keep wavering or several factors are influencing your decision. However, with automated trading, your discipline will be maintained, as the system will diligently follow the plan you have already set up. This is a great way to stay consistent and reach your goal.

Cons1. Tech Dependence

The effectiveness of automated trading depends fully on technology and as much as technology has been improved in recent years, there is still the possibility of some fallbacks. There is a possibility of algorithmic errors, slow internet connection, and other mechanical failures.

2. Requires Monitoring

While it is an automated system and would function without you being actively involved, it still needs some level of monitoring to ensure it remains effective. One major factor to consider is tech dependency and you always want to ensure that the connection isn’t lost, there isn’t any power outage, and the computer is working effectively.


To get the most of automated trading systems, you have to carefully choose one that is efficient and will provide you what you need to get started and keep going. Also, beware of scams and avoid offers that may seem too good to be true. Preferably, only opt for software created by reputable companies.