Automated trading and Trading for a living

Automated trading is something that exists since computers and electronic devices appeared in the American markets.

This type of trading has great advantages that attracted  a lot of people from the beginning.

Automated trading from home

The best advantage is the possibility of being away from home while trading, without the need to spend many ours in front of the screen. Only those who invest for the long term have that pleasure, but not in all cases (many long term investors look at their stock quotes every day.

Moreover, automated trading achieves something else: it makes easier the important psychological factor, which can be draining for any trader. If we can make our algorithm or buy a good system, we will have saved up a lot of anxieties.

Who would not pay for that?

Automated day trading?

The main problem with automated trading is that – I would say more than 95% – comes as day trading systems. It is, perhaps, because it is what people demand. That means; the systems are there because there is a huge demand for them.

The masses want quick profits and easy money, and that is something that only day trading “can” promise.

You only make 80% per day doing day trading. That is the cause of the massive consumption of all the myriad of trading systems out there today.

It goes without saying that the majority of those systems will be losers in the medium term. And if there are some good systems, they will be very difficult to find.

One of the best traders ever was William Eckhardt, the colleague of Richard Dennis, and follower of automated trading. It took not long for him to realize that the best strategy a automated one.

His trading was following the trend, but not doing day trading. Let´s say that he traded in a similar way than Dennis, but automated, instead of manual.

Eckhardt knew that most trading systems out there were useless.

His interview in the book The New Market Wizards is a must for anyone who is interested in the world of automated trading.

Automated trading and Forex

Automated trading is used in every kind of market, either stocks or futures, but the most expanding automated trading market the last years has been retail forex.

Not long time ago, automated trading was kept for medium and high-class investors, whom would buy or invest with systems in markets like stocks, futures, options, etcetera. You needed some capital to invest in those markets.

With the advent of retail forex, there was a boom in that “industry” of automated trading.

The flexibility and facility that exist to trade in forex made that everybody in the world had access to automated trading and the financial markets.

Automated trading Expert Advisors

Nowadays everybody can open a forex account with 100 $. It has made the number of systems grow exponentially: from Expert Advisors to trading signals, to system vendors.

It is a very lucrative business without a doubt. But contrary of what most people think not for the traders, but for those who sell these products.

Whoever has the honor to use or buy one of this systems will find out in eventually that his account has lost money (regardless of how pretty things looked in the beginning). It will be the norm, with just a very few exceptions.

Those who say that automated trading is the best trading style and sell products related to this, are, in most cases, making a living from selling those products, not because there are trading those systems.

One of the best blogs about this world of trading systems in forex, and in particular using the coding capabilities of the famous metatrader platform, EA´s Birt Review, reminds us that the majority of systems he saw were rubbish, finding just a very few that could be recommendable.

Automated trading works?

Doing automated trading is not necessarily bad.

Just remember Eckhardt and other cases.

In fact, this world offers some good opportunities if you want to explore it.

If you have programming abilities (just basic concepts) and want to investigate in the different platforms, you may find something good. Maybe something that you could someday use (normally systems whose trades last more than one or a few days).

What will be extremely difficult will be to find systems that are being sold, or automated Expert Advisors, that will show us the way to trade for a living easily.