Definition Of Auto Trading And How Does It Work In The Capital Market?

by Algomaker India Algorithmic Trading companies in India

Auto Trading is a plan of trading through which the trader sells and buys the orders by placing the orders automatically on a central program. These orders can only be placed when the central program or systems are met. Using the auto trading platform one can simply copy the trades of the other experienced trader to earn more profit. In this way, the user can fully automate the trade even if the user is a beginner. It is not a perfect trading mechanism but if the entire trading is done through Auto trading then it is better to learn how it is done and what are the process involved in it.

• Does auto trading work and is it legal?

Auto trading turns the trading system, the exit, the entry, and the money management rules in the trade markets into a great programmed system instead of following the system manually. Auto trading considers manual to superior trading model because it eliminated human emotions completely. Auto trading takes place in the commodity market, money market, stock or share market, cryptocurrency markets in a legal way. There is no law that goes against the Auto trading mechanism.

• What is the profit factor in the auto trading mechanism?

There is no trading method that is profitable, and it is not different in the case of auto trading. If the system of the program is accurate then auto trading is profitable for the user but auto trading can also be successful in emptying the trading account. All auto trading systems must be monitored regularly. If there is a change in the market forces then that may lead to a successful and profitable change in the auto trading system. There is no easy way to earn profit.

• Key lessons learned in the auto trading system

. Auto trading uses computer algorithms for a large volume of trading with minimum capital impact in the market.

. Auto trade places to trade based on defined criteria carving the trades into smaller lots so that the price is not impacted in a larger way.

. It implies placing thousands of orders at a fast speed.

. Auto trading promises the best execution because it minimizes manual intervention and manual emotion.

. Auto trading has given rise to improved market liquidity and price consistency but at the same time increased the risk element in the market.

The main goal for Auto-Trading in the capital market

The main aim of automatic trading is to place thousands of orders at an unimaginable speed. It focuses on making a profit on each trade by taking advantage of price differences for the same asset or stock in different markets. It is opposite from orthodox trading or traditional trading. The trading occurs within a small-time window before any price discrepancies happen. Since auto trading has improved liquidity and asset price consistency the use of this mechanism increased manifold, but it does not get away with the risk of ripple effect as the markets are inter-linked.


Auto trading has become an essential part of the finance market because it uses a developed technology, and it eliminates human intervention and emotions. It aims at earning profit despite risks in the system.

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Created on Feb 26th 2022 00:51. Viewed 158 times.


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