Because of technology, automated binary options systems have been a buzz around the trading community which enables faster and easier transactions between binary option brokers and assets. Here are the pros and cons of binary options automation:
- Minimize emotional tendencies
Automated trading systems tend to lessen emotional involvement when the trading has begun and started. By checking in with emotions, brokers or traders have an easier time strategizing and sticking to their plans and predictions. Since trade orders have been done mechanically, traders will not be able to question and criticize the trade because it is automated and computer-generated. Moreover, automated systems can detect those traders who do overtrading where it is considered illegal and cheating.
- Automated systems can rewind and back test
By determining the credibility of the idea, back testing adheres to the rules of trading to historical market data, which you can find out more at Wikipedia. So when there is cheating involved, traders can rewind the trading data system. All rules are absolute and the computer has been told exactly what it will do by the computer programmers. Traders can test them on data before taking that risk of extending money in trading live.
Cautious back testing allows trading people to review and revise a trading idea, by also knowing the systems’ expectancy. They can interpret the past before doing anything risky.
- A more disciplined trading
An automated binary options’ rules are established and execute of the trade are done robotically. Discipline is kept in check because emotions are more controlled and with live trading, emotional factors can suffice like fear when it comes to losing money (and integrity), or the desire to take out a little profit from a trade. With automated binary options, it ensures discipline because the trading plan is followed strictly and with justice. Consistency is also achieved because the trade plan is followed gloriously and they can also trade the plan to others with strict guidelines and trading rules.
Problems of automated binary trading also show off in automated binary options trading. These are some common disadvantages of automated binary options trading.
- Failures and mechanical bugs
The principle behind automated trading is to set up the software, install and program the trading rules, and sit back, relax and watch the trade. However, when the server or an Internet connection is lost and fluctuating, an order might not be sent out to that market. A trade order could be done on a computer, depending on the trading system and if one computer disturbance has been felt, the trading transaction can be an ultimate failure.
Experts suggest that when using automated trading systems, it is a good idea to trade in small dozes and use a demo account first to explore and test out initially the automated binary system.
- Inability to perform
Traders who encourage back testing strategies can craft systems that look great on paper and in written form, but when applied, in the live market it can backfire. Over-optimization can happen, which defines as an excessive curve-fitting that gives off a trading plan that is unreliable in live trading. This is very common in automated binary options system.