Automated trading, also known as algorithmic trading, has revolutionized the way financial markets operate. At its core, it involves the use of computer algorithms to execute trades at speeds and volumes that are impossible for a human trader (executing multiple trades in micro seconds). The advantages of automated trading are manifold, making it an increasingly popular choice among both institutional and individual traders.
One of the primary benefits of automated trading is its efficiency. Algorithms can analyze vast amounts of market data in milliseconds to identify trading opportunities. This high-frequency trading means that algorithms can capitalize on market changes much quicker than a human ever could. Additionally, automated trading reduces the emotional element from trading decisions, thereby minimizing the chances of making impulsive, irrational decisions that are often detrimental to investment strategies.
