What advantages do automated trading systems offer?

Fully automated trading systems operate according to human-programmed trading strategies. The computer, or Expert Advisor, pursues these trading strategies without emotion, like a robot, hence the term "trading robot." Emotionless trading through trading systems is a key advantage because the Expert Advisor makes decisions based on logical calculations rather than gut feeling. Emotions, especially greed, can lead traders to make bad decisions. In anticipation of high profits, traders take too much risk, which can also lead to significant losses. In order to quickly recoup losses, they take even greater risks.

Furthermore, it's very human to want to quickly secure profits. You don't want to lose what you have. Trading positions are closed too early, even though the positive trend continues. The market might turn around again, and the trader might lose profits.

Conclusion: Losses are often allowed to continue and profits are skimmed off as quickly as possible. Here, emotions prevail over rationality, which in some cases can lead to total loss.

In contrast, trading systems have clearly defined settings, also called parameters. Strict risk and money management minimize losses and maximize profits. Stop-loss techniques such as trailing stops keep losses to a minimum. Profitable positions are not closed immediately, but rather the trading system is given leeway. Profitable trading positions can take advantage of a larger trend movement, despite the usual market noise and associated pullbacks.

Fully automated trading systems also incorporate the knowledge of stock market experts. This knowledge can be so comprehensive that a single person can hardly utilize all the trading opportunities. Computers operate many times faster than humans in many areas. The trading system can execute trades in a fraction of a second and operate around the clock. A trader's ability to absorb information and concentrate, however, is limited.