Archive for May 31st, 2009

Today’s market is very competitive that every second accounts for the win and loss of a trade. Automated stock trading softwares are very useful for a trader who wishes to succeed. Automated trading systems are financial tools whose primary purpose is to enable trading sans any human intervention. Orders can be executed through these automated systems even if traders are away from their computers.

Automated stock software has many different components. The stock market screener piece is a very important part. Based on user input, this part will screen for appropriate stocks. Another element of any good automated stock software is the ability for direct access stocks features, meaning that you can trade with any other client. These modules are necessary for any decent automated stock trading software package.

Order execution will greatly improve by eliminating this human factor. With automated trading systems, there will be no more missed opportunities to trade.Traders are left without any alibis that usually involve second-guessing your own system or making typographical mistakes while encoding orders. On top of that, automated trading softwares allow trading opportunities with many brokers.

Automated trading started 15 years ago in the equities market. Back then, boiler room and outcry trading floors are the more popular platform. In the long run, hands-on trading processes have been replaced by automated trading systems. With automated trading, prices are no longer quoted over the phone or published through manual confirmation. Prices are now executed on screen, by the computer. What happened then was that equity market vendors used to do trading through phone calls and on-screen trading systems until they decided to expose their softwares which beckons its use for other instruments such as foreign exchange, money and bond markets. These softwares used to be hidden behind online trading screens that publish bids and offers. Bloomburg and Reuters are two among the vendors that started exposing automated trading softwares for other instruments other than equities. Banks, on the other hand, do not have the capacity to do the same they have decided to offer screen trading through web interfaces.

Automated trading softwares are user-friendly. All you need is to submit an order by keying in the instrument, price, quantity, and the trader’s plan to bid or offer. Instruments refer to the type of market such as equities, foreign exchanges, et al. Price are quoted depending on the convention of the market chosen by the trader. It may be quoted in terms of amount or units. The trader’s strategy is either to bid or to offer a certain instrument. To illustrate, a trader may choose to bid $5 million for the forex instrument GBP/USD (Great Britain Pound-US Dollars) at a rate of 1.6789. This bid means that you are looking to buy 5 million dollars for 2.9781 pounds—your bid over the exchange rate.

The financial market is in constant flux, so they say. The number of bids and offers are queuing. Once a trader made an offer or a bid, it gets instantly added to this roster. Traders can also cancel their orders whenever they seem to have bid at an expensive price or a price that is too cheap and vise versa. Canceling an order means that the trader automatically gets placed in the back of the queue which risks not getting dealt with. It is advised for every trader to analyze what they are getting into before entering a trade.

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