Have you ever wondered as a small investor if you can make profits with an automated trading system? If yes, this article is for you. Before jumping into the details, you need to know what an ATS (Automated Trading System) is and some basic principles of working with it. 

 

Automated Trading System is a computerized systematic method of trading. It is also known as algorithmic trading. The computer program can analyse the profits before sending in the orders. There are a set of rules set by the traders that must be met before trading. Let’s discuss the details of the automated trading system and how small investors can make profits.

 

Contents:

Research the Competition

The Programs of the Pros

DIY

Shortcut to Buying a Program

Final Thoughts

 

Research the Competition

One of the most important steps before you jump into making profits through the analytical automated system is to look at the competition and know more about their tactics. If you go back to the early 2000s, you will see that most of the major trading companies had more than 500 employers as traders.

 

But as they converted to ATS, the number of traders decreased to less than 10 members. They invested in the software engineers and the program used to trade. Nowadays, even the smallest start up trading companies employ more software engineers to maintain the automated system. As per recent statistics, about one-third of trading companies’ employees consist of software developers.

 

Have a look at major investment banking companies like JPMorgan Chase and Goldman Sachs. They have about 100,000 employees. Out of that there are 2 traders in Goldman Sachs and the rest all work in maintaining, security, and updating their Automated Trading System. These are huge companies but they started small and they made better profits with the computerized system. The turnover almost doubled when they converted into the automated system and eliminated a lot of workforce.

 

The Programs of the Pros

Well, the computer programs were easy to determine back when they just started off. It was very easy to predict their selling and buying prices. But with time the program was developed and the ATS has become more complex. Some of the recent programs have artificial intelligence capabilities that will help in organizing the trading systems much more efficiently. 

 

Also, it would not be easy for people to predict in open markets. Programs are being improved every minute so that it follows the trading ways of a human. All the trading companies including banks, pension and mutual funds are based on ATS nowadays. That is how they are getting the best prices and better opportunities to make profits. The ATS program has also been stimulated to pick up slight differences in the same asset that is being sold in London and New York. 

 

By using the automated system, you will be able to buy the cheaper version from London for example and sell it at a higher price in New York. Such anomalies, although slight, can be found and used to gain profits. It might seem insignificant if it is cheaper by a few cents but when you think about hundreds and thousands of dollars, the gain will be much more. Therefore, this program has been taught and trained perfectly to not only survive but to win in the trading world.

 

DIY

Thinking about entering the trading world as an individual? Don’t worry as we will give you extensive lesson tips to start your own investment system. First of all since it is a computerized system, you need to be able to build the program. If you already have some idea about JAVA, Python or C++, you need to brush up your skills. If not, you have to get a crash course on one of the computer languages to build and run the code.

 

After you have built your logic and strategy, you have to study and research. Trading changes every second and every minute. Go through blogs, books, and people who are involved in trading. Make sure you assess the upsetting events in the trading history and be ready if they occur. 

 

It is time to go back to your program and test your new trading strategies. Before that, you have to test it using the old data to know if there are any bugs in the program. Make sure you have removed the bugs as and when they appear. Don’t make the mistake of making changes immediately when you think it will work or starting to use the data to get profitable results. The program should be able to make logical decisions and for that losses are necessary too. 

 

Shortcut to Buying a Program

All the above mentioned steps are tedious and time taking. Actually running a trading code is much more difficult than it actually seems like. There are other steps with an open source brokerage platform and connecting it with the Python code that you built. You have to constantly run it and debug it for you to get proper results.

 

To overcome all that, you can simply buy a trading program that was built by someone else. It might sound too good to be true. That is why prepare yourself with research and questions before you actually buy it.

 

Final Thoughts

Our final thoughts about using the automated trading system is that a small investor has potential in using it. But you are about 20 steps away including building a trading logic system and running it and building trading strategies. Yes, the returns are fruitful but only when you put in 100 percent of your work and study into it. Nobody said trading would be easy. It will be easy in the future once you have built the logic and run it several times. But with the right trading platform, you can achieve great results!