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Trading


Software


Pitfalls












Learn how to avoid trading software pitfalls.

Trading Software Pitfalls


Trading software allow market participants to automate day or swing trading or investing strategies.
Indeed, one is delegating trading executions to a trading algorithm.
However, there are pitfalls one ought to surmount.

1/ Building flawless trading software

The first pitfall is the validity of the software. It is the foundation. One should always consider the following when building a trading software:
a/ valid trading software do not violate the three market patterns,
b/ robust trading software always trade the price action instead of the technical indicators,
c/ viable trading software must use the multiple times frame trading method,
d/ all entries should be on the edge,
e/ users should have the competence or at least a self explanatory user guide,
f/ and users also ought to have a minimum support or be able to contact the support team.

2/ Trading Software Dependency

Quite often traders purchase trading software, and expect trading software to trade for them. In most cases, traders usually purchase trading software with a high winning rate, and expect them to do the hard-work. Nevertheless, many trading software have failed the validity test. Therefore, traders who place their faith in them may lose substantial amount of money If they have no ideas about how to day or swing trade with the trading software.

In many cases, those who purchase a trading software for the sole purpose of making buck, will spend a lot of money just to get their hands on that miracle working trading software. Truly, there are no miracle working trading software.


Normally, a competent trader can buy a trading software to assist him or her in trading, but he or she does not wholeheartedly rely upon the software. A competent technical trader will quickly differentiate a useless trading software from a top one. He or she can also figure out what is hidden in the black box in some cases.

A trading software is an essential trading tool for big financial institutions. In this instance, most financial institutions would develop their own trading strategies. Subsequently, they will trade them for a long time before converting them into a trading software. They would also test and refine those strategies to the point where they would be able to identify the following:
1/ what are the most suitable financial securities,
2/ what is the most favourable time to use the software,
3/ what are the best trading signals,
4/ and most importantly how to manage the risk.

Trading software misuse

A trading software should be specific.
For example, one can build a day trading software, Forex day trading software, blue chips stocks day trading software or Apple stock day trading software. Each automated trading tool is unique. One should not utilize a stock day trading software for Forex day trading or an Apple stock day trading software for day trading commodities.

End User trading software trial time

After purchasing a trading software, it critical to learn how to apply it. It can take up to two weeks before one grasps how it works. During the trial, one can contact the provider if possible to clarify any confusions that may arise. One should also use a demo trading account instead of a real one to avoid wiping out the trading account before one masters the software. One should not be shy to ask questions or request assistance.
If at the end of the trial, one is satisfy with the performance, the only thing one may have lost would be the cost of purchase instead of the trading account.

Trading software believers

Eighty per cent winning rate trading software would not always deliver that winning rate success. It may deliver between 60% and 100% winning rate or in the worst case scenario between 50% and 80%winning streak.
Note that in each case the risk management will reflect on the size of the profit or loss. Therefore, one should not expect
a trading software to perform at its highest level at all times. Moreover, a novice trader must not expect the same results as a more experience one.


Remember the most important trading tool is the trader not the trading software.
Indeed, personal input, knowledge and trading skills count when one is using an automated trading system.

Monitoring The Trading Software

One should always be ready to monitor the trading software. It does not matter whether it is the most powerful trading software. On occasions, one may have to shut it down or override trading signals due to the market environment or price action distortions.
Moreover, a high performing trading software can become obsolete due to dramatic market changes. For example, market leaders may completely change their trading activities or new major market players may change the trading game. For example, in 2008 the financial markets have profoundly changed due the influence of the new market players: high frequency trading firms.
A surge in automated trading has created a new playing trading field.

As the financial markets are constantly changing, it becomes essential for trading software users and builders to take

into consideration the new parameters or to stick to the fundamental market principles or market stable data.


It is always naive to assume that all one needs is a powerful trading software. Powerful trading software are more beneficial to those who build them, and market participants who understand how the financial markets work.

A trading software like any other tool will not do the hard lifting work, but empower those who already know how to use it.

Similarly, a useless trading software will not provide any meaningful help to the user because it is fundamentally flawed.

It does not matter whether it is insanely expensive or produced by a reputable person. If the software is flawed, dump it or build a better one that does not ignore the basic market principles.


It is also a mistake for a beginner market player to spend thousands of dollars on a trading software, and hope that it is all well. Yes, a powerful trading software will help to a certain degree, but help even more, if one has more experience in the financial markets. One should invest more in the ability to invest or trade more profitably, unless one has gotten the experience, and looking for an automated assistance that one can control. Never use a trading software that you can not control or understand. Always be in charge because it is your money or reputation that is in question.