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The advantage of such systems is that they do not get tired; they are always in the market and are following the restrictions on entrance and exit from the market and the volume of opened positions. Due to the increase in the trading instruments in the stock markets, the amount of instruments traded electronically is also increasing. The temptation to transfer the trader’s functions to an automated system is almost irresistible.
There often appears a problem of adjustment of each trading system for each particular instrument. You cannot use the same trading system for all types of market and stock instruments. For instance, a trading system intended for the gold market should not be used for futures on soybeans or wheat without verification and optimization.
The technical platforms, which could provide such services, are starting to appear in Russia, but they still need to be improved in terms of design, service and interface. There have been made some steps in free service, but free services and free strategies, which you can find in the Internet, are a lot like free cheese in a mousetrap. It’s hard to believe that someone will place a really effective trading system on the Internet for use by anyone. This is too good to be true. So the best solution is to design such trading systems on the basis of your own soft and use them together with a reliable broker.
There are enough of such brokers in the west but even there failures happen. Bankruptcies take place and that’s what we all want to escape. But at the same time there are reliable brokers, who have been in the market for a long time and provide such services.
For working in various high-liquidity markets we are using our own automated trading systems. The range of the traded instruments is not limited by short-term currency market due to long periods of uncertainty characteristic of this market. We trade the high-liquidity commodity futures and options, the shares of American and European companies. All these instruments are available for electronic trading. There is no necessity for a trader-executor, which will call on the phone and order the rates.
Such trading systems can be effectively used both in case of the market "noise" and for the global trends. Activities in the market "noise” can be more profitable for the system can note a short-term price changes in a certain market range. The automatic trader has a function of the prices leaving the range and turning from the range to trend trading. As trends are rare in the market and its hard to predict their coming, its reasonable to use the automated trading systems when the market is quite and trading is going within the range.
In case of a trend a trader usually earns money and looses it upon range trading, so we are using automated trading systems to get out of such situations. It’s not reasonable to expect that their profitability will be 400% per annum for the trading systems, which on the past data show 100% profit, in real conditions turn less successful. These are high risk systems – high profit corresponds to high risk.
Therefore, our main concern is not to increase profits but to reduce the risks. The optimum system shall have its own method of analysis of the taken decisions. This is a more difficult mechanism than a mechanic trading system. It can be used to manage the clients’ assets, of course, under a close control by designers and software programmers. The average profit of an automated trading system shall not exceed 240% per cent per annum. It is also characterized by a low risk and a possibility of quick optimization and adjustment to the changing market conditions. These are the main requirements, which it shall follow.
The topic of automated trading is really wide. It currently arouses more and more interest of investors, so a lot of people now are using their intellectual resources to create something, which would really work. The further development may result in growing the number of automated traders in the market and people trying to spot their algorithm errors. The best thing here is not to go into too much detail but to take advantage of the current market situation.
Resume
We use automated trading systems as a tool for reducing emotional and physiological waste, i.e. a person is getting really tired trying to concentrate on the market. This function of concentration, observing and simple mathematical analysis is transferred to automated traders, which can analyze hundreds of traded documents (shares, futures, metals, crude oil). These are different markets and though they do have much in common, various approaches shall be used. There is no universal system, which could work with the same profitability in all markets. A flexible approach is required and automated trading can have that flexibility. It’s impossible to foresee all in the market, but with the use of automated systems you can avoid a lot of mistakes. |
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