Automated trading systems – online stock trading UK

by Jonathan Adams

You may have heard about automated trading systems. These are computer-based trading applications which automate the process of buying and selling securities on an exchange. As an investor engaged in online stock trading UK, you subscribe to an automated trading service and fund your account, but you don’t need to spend a lot of time reviewing how the system is working as everything is automated. You can always unsubscribe and move on to another one in case you find that you don’t like a particular service.

Automated trading is fairly simple to begin with. There are number of online stock trading UK services for you to choose from, and when you sign up with one, you typically set up a strategy for trading stocks, options and foreign currency. Once you’ve reviewed and settled on a trading strategy, you open your account with an online broker or sync your automated trading account with an existing brokerage account.

Once you’ve funded your account for automated trading, the system implements your chosen strategy. As this is an algorithm and statistical data based trading, your account will buy or sell the strategically chosen securities or other holdings according to certain statistical behaviour of the market. Initially, you can track how your strategic trading is going; and continue with the account if you’re happy with its performance.

There is also way out if a security isn’t performing according to your expectations. You can intervene and stop trading to prevent losses. You can also liquidate and delete positions altogether if you do not want a security to be part of your trading strategy or portfolio.

Beware that automated trading is not for everyone. Frequent trading and an opening account balance of at least $5,000 are required by most systems. Remember that every trade you make comes with a commission, so you’ll be paying fees for your frequent trades and racking up costs along the way. Automated trading is not for those who prefer to follow a buy-and-hold strategy.

In case you’re fine with frequent trades and want to put your account on a type of autopilot, you should find more about it. Investors actively engaged in automated trading can frequently improve their returns over time without researching a lot on securities. Most automated trading systems use a combination of statistical analysis and technology to analyse security positions for you.

Automated trading systems are appealing to investors with an understanding of the way the market works and want to have more control over their trading. There’s risk involved with automated trading just as there is risk involved in manual trading, but automatic trading can help you expand your asset classes, get into stocks you might not have known about and make money on more trades than you could with manual trading. Automated stock trading can also be used as a complement to manual trading in an online account for optimizing trading prospects. The automatic system will be making trades for you while you’re doing research and executing your own transactions simultaneously.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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