Automated trading platform

Automated trading platform

An automated trading platform is used both by trading system publishers, and the investors who subscribe to them. Using it, traders can track marked-to-market performance using several different metrics for verifiability. ["Discovering trading ability: Collective2." Tradres-mag, February, 2008.] In addition to tracking performance of these "black box" systems, the automated trading platform also provides a venue to permit the system's buy/sell signals to be executed to the subscriber's brokerage account automatically. Some of the automated trading platforms are completely broker-agnostic and permit an interface with almost any brokerage firm.

The immediate benefit to investors is that it allows them to have insight into various trading systems that are on offer, which may make claims of profitability. The platform "allows people or institutions that believe they can outperform the market to prove to the public in a verifiable way that they indeed can do so." [Larry Levy. "The e-Forex site inspection." E-forex, October, 2007.] In the second stage of use, traders subscribe to one or more of these trading methodologies, and have the trades that are specified by the system executed automatically in a brokerage account.

Although turning over decisions and execution to a "black box" system requires the investor to give up an element of control, the automated trading platform does serve the purpose of allowing the trader to spend more time on strategy and on studying trends, rather than executing those strategies manually.

Speed of execution

The appearance of automated trading systems and stock markets has greatly narrowed the window of opportunity on many trades, sometimes to just a few seconds in duration. In response, traders are turning to automated systems of their own. If for example, one is trading on one of the many systems that hinge on these very small windows, manual execution is virtually impossible. Execution of the trades must be initiated immediately, with split-second accuracy, as soon as the system gives the buy/sell signal. [Matthew Klein. "Trading systems and automation." Collective2 web site, http://www.collective2.com.]

Best practices

The automated trading platform, in providing a venue for analyzing multiple stock trading systems or "black boxes", provides a tool for verifiable analysis of each of those systems. While such systems often make claims of profitability, and sometimes of unheard-of returns, the automated trading platform allows the investors to vet those systems and play the ones most likely to win. Generally accepted best practices are described by Klein as follows:

* Examine each system's success rate over time
* Measure the system's historical risk versus its historical profitability
* Track current performance with a simulated account
* Spread your investment portfolio across multiple systems
* Constantly re-evaluate the mix of systems you have chosen. [Matthew Klein. "Trading systems and automation." Collective2 web site, http://www.collective2.com.]

References


Wikimedia Foundation. 2010.

Игры ⚽ Нужна курсовая?

Look at other dictionaries:

  • Trading system — In electronic financial markets, trading system, also known as algorithmic trading, is the use of computer programs for entering trading orders with the computer algorithm deciding on certain aspects of the order such as the timing, price,… …   Wikipedia

  • Electronic trading — Not to be confused with E Trade. Electronic trading, sometimes called etrading, is a method of trading securities (such as stocks, and bonds), foreign exchange or financial derivatives electronically. Information technology is used to bring… …   Wikipedia

  • Mirror trading — The mirror trading method allows traders in financial markets to select a trading strategy and to automatically “mirror” the trades executed by the selected strategies in the trader s brokerage account. Traders can select strategies that match… …   Wikipedia

  • Mirror Trading — A forex strategy developed in the late 2000s that allows investors to copy the forex trading behavior of experienced and successful forex investors from around the world. Mirror trading was initially only available to institutional clients but… …   Investment dictionary

  • Japan Association Of Securities Dealers Automated Quotation - Jasdaq — An electronic security exchange based in Tokyo, Japan. Originally an over the counter market, Jasdaq launched an electronic trading platform featuring an automated quotation system similar to the Nasdaq. In 1963, the Japan Securities Dealers… …   Investment dictionary

  • Colombo Stock Exchange — කොළඹ කොටස් වෙළඳපොළ கொழும்பு பங்கு பரிவர்த்தனை Type Stock Exchange Location …   Wikipedia

  • Uganda Securities Exchange — Infobox Company company name = Uganda Securities Exchange company company type = Stock Exchange company slogan = Building your investment portfolio foundation = June 1997 location = flagicon|Uganda Kampala key people = Simon Rutega, CEO Judy… …   Wikipedia

  • Economy of Sri Lanka — With an economy of $27.4 billion [http://www.bloomberg.com/apps/news?pid=20601080 sid=aNR7gHhtMcG0 refer=asia] ($95.5 billion PPP estimate [https://www.cia.gov/library/publications/the world factbook/geos/ce.html#Econ] ), and a per capita GDP of… …   Wikipedia

  • Economic Affairs — ▪ 2006 Introduction In 2005 rising U.S. deficits, tight monetary policies, and higher oil prices triggered by hurricane damage in the Gulf of Mexico were moderating influences on the world economy and on U.S. stock markets, but some other… …   Universalium

  • MetaQuotes Software — Corp. Type Private Industry Software Founded 2000 (2000) Headquarters …   Wikipedia

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”