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.
http://www.youtube.com/watch?v=lr6gX-o6wRM
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.
http://news.gmtfutures.com/hints-for-automated-forex-trading/
If you would like to become part of the GMTV2 Elite automated trading system team please email info@gmtfutures.com or view our automated trading systems page below:
http://news.gmtfutures.com/trading-systems/
Regards
TEAM GMT
Automated Trading Systems
