Automated trading is a method that many investors use to invest even when they do not have much time available, in fact it allows you to execute and monitor trading operations in an automated manner and therefore without the need for a physical presence of the investor.
It involves the use of automated software, known as automated trading systems, trading robots or expert advisors, which allow traders to execute their strategies automatically.
The trader defines specific rules for entry and exit from trades that are automatically executed by the software, so the software will choose the positions to open and close, the assets to invest in and how to operate.
The trader will only set parameters used by the machine to do the operations. Therefore every trading system will be different because it follows a different trading strategy.
Automated trading helps to minimize emotions during trading activities, therefore, especially for inexperienced traders, this approach leads to maximum rationality and the ability to scientifically study past performance (which are no guarantee of future earnings) .
The automated trading software allows the trader to evaluate his systems through a backtest phase, determining the expectations of success (or loss) for each trade.
Automated trading allows you to consistently evaluate the plan because it is exactly executed. In this way it will be possible to see if a trading idea achieves the foreseen objectives.
The machine automatically responds to changes in market conditions. This is why automated trading systems are always faster than man and, in some cases, this can make a difference.
With automated trading it is also easier to manage multiple accounts and follow several different strategies at once.