Automated Trading Systems - A clear Edge

Hi Traders,

Let’s start our article out today with some very interesting statistics on trading success and system automation to frame up the potential we have and where there is a clear and immediate edge to be exploited both as a new trader and one that has been around for a while.

Automated Trading Systems

Regardless of where you sit on the automated trading debate the following statistics may surprise you.  From the hundreds of the traders we have spoken to and the interviews we have carried out with two very large brokerage houses.  Our research has shown us that 90% of new traders fail within their first three years of being in the market….no surprises there.  Some brokerage firms have this number slightly higher, particularly new Forex traders.

What is interesting is that while 90% of new traders fail, those who find automation during this three year period, which is about 15% of new traders, over 85% are consistently profitable and achieving success.  This is a staggering reversal from those who are manual trading and are mainly discretionary traders.

If you are yet to embrace the power of new technology trading through automation, those numbers should at least give you cause to stop and investigate, particularly if your trading is breakeven or you find yourself losing money.

Why is automation giving new and experienced traders such an edge?

If we explore some of the reasons why traders lose money in the market, the reasons become glaringly obvious.    The following youtube video also helps to clarify the benefits of automation and the edge that we can achieve through automating our trading strategies.

1.       Trading with an edge

Most new traders are discretionary traders who do not have an objective edge in the market.  Many change and modify their strategy constantly, based on winning and losing runs which makes it extremely difficult to measure the performance of their methodology.  Good automated trading system are designed to run with a clear edge in the market.  They maintain a positive expectancy applying market dynamic filters that have been objectively backtested and forward tested to ensure the system is robust in live market conditions

2.       Remove the emotion of executing trades

The impact of trade psychology and the physiology of actual trading can have an huge impact on whether we are successful or not.  It is estimated that trading psychology is the simple most import factor that determines your success in the market.  Let’s acknowledge that it is one of the critical elements to your success.  By automating your trading you are effectively eliminating the emotion attached to entering the market.  While you will still experience the emotions of being live in trades, the decision making process and the trade execution has been eliminated.  Therefore allowing you to flawlessly execute your trading plan with hesitation.

3.        Take some Time Back.

Do you remember some of the reasons why you may have become a trader?  Working smarter not harder and allowing you to leverage your time in the market to make money and spend more time with your family and friends.  This is often the complete opposite to what actually happens with traders.  New traders often get caught up in screen watching, overtrading and spending hours upon hours just to make sure they don’t miss that perfect trade.  The longer you trade the more chance you have of experiencing fatigue and making a mistake with manual execution.  Take advantage of automation to get back some of that valuable time you are giving away and never miss another trade again but automating your entry points.

4.        Testing up your strategy within seconds

Testing up a new market or time frame can take weeks if you are using a manual strategy to trade.  It means hours of logging trades to ensure you have an objective edge on any new potential market and timeframe.  Automated trading strategies allow you to backtesting in seconds and see the outcome over a number of years proving up your edge.  You have a full breakdown of average net profit  per trade, percentage win rate, longs versus short performance, worst consecutive losing run, largest drawdown etc.    Automation again will help you take back some of that valuable time you previously would lose testing.

5.       Multi System Trading

One of the keys to successful trading is being able to capitalise on multiple trading opportunities across multiple uncorrelated markets.  System automation allows you to achieve a multi-system strategy which has the purpose of increasing net profit and minimising overall portfolio drawdown.  Manually trying to execute multiple markets and timeframes is very difficult and increasing your potential for human error.

I hope this information helps in your quest to gain a greater understanding of the benefits of automated trading.  For more information on automated trading please click on the links blow.

If you would like to become part of the GMTV2 Elite automated trading system team please email or view our automated trading systems page below:



Automated Trading Systems


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