Backtesting applies trading rules to historical market data to determine the viability of the idea. When designing a system for automated trading, all rules need to be absolute, with no room for interpretation. The computer cannot make guesses and it has to be told...

Because trade rules are established and trade execution is performed automatically, discipline is preserved even in volatile markets. Discipline is often lost due to emotional factors such as fear of taking a loss, or the desire to eke out a little more profit from a...

Automated trading systems minimize emotions throughout the trading process. By keeping emotions in check, traders typically have an easier time sticking to the plan. Since trade orders are executed automatically once the trade rules have been met, traders will not be...

One of the biggest challenges in developing a system is to plan the trade and trade the plan. Even if a systems plan has the potential to be profitable, traders who ignore the rules are altering any expectancy the system would have had. There is no such thing as a...