The Dangers Of Using An Automated Trading System

The automated trading software will boast about the many advantages of using them. But have you ever analyzed the risk that they carry with them?

Automated trading software seems to be an easy way to make money. Something like a lottery. However, that is far from the truth. There are many disadvantages of using an automated trading system. It is thus important that you bear caution if you plan to use one.

System failures

The theory that goes behind using automated trading software that just starts the program and the software will run and take trades for you. The system is very sophisticated but not totally reliable. The trader cannot control the trading server and thus in case, there is a loss in the internet connection the order will not go to the market. This means that it could happen that you have brought a trade and want to sell it because it is not performing well. However, the internet connection just gets lost at that time and the sell order does not go through. When finally the server gets connected it is already too late and you have lost a substantial amount of money already.

Monitor the trades

One would think that they can start the computer and leave it to make money for them with no monitoring. But this is not exactly true. You would have to continuously monitor the system for any failures like power failure or connection being lost. There could also be cases when the system would place duplicate orders or miss the order. You would thus have to keep monitoring the system to look out for such mistakes and get them resolved.

Over-optimization

One could end up doing so much of backtesting that he would be able to generate an algorithm that just looks good on paper but does not work in the real market. A trading plan is not about being 100%perfect and thus you cannot create a trading plan that is near perfect as well. The automated trading software would show you how they have performed by backtesting data, but it is unlikely that it would be able to perform at the same level in the live market.

Conclusion

Automated trading software like Infinity App Software is not something that can be totally relied upon. Your own trading knowledge and skills are what will make money for you eventually in the long run.