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Testing Manual Systems Using Automated Trading Systems

Introduction to Black Box or Automated Trading

  • Black Box or Automated Trading refers to forex trading using automated systems created with programming languages.
  • Abroad, it's known as algorithmic trading, while in Indonesia, it's more commonly referred to as an expert advisor (EA).

Development of Automated Trading Abroad and in Indonesia

  • Abroad, the Black Box has seen significant development in launching new trading strategies, commercial purposes, and manual system testing.
  • In Indonesia, the use of EAs is more common for new and unique strategies, but it's not widely used for manual system testing.

Reasons for Using Automated Trading

  1. Efficiency: Better technology is more efficient in assisting humans and tends to be cheaper than hiring analysts.
  2. Transaction Speed: Automated trading allows for fast transaction execution, overcoming delays in manual trading.
  3. Strategy Simulation Testing: EAs enable easy simulation testing of strategies, something challenging to do manually.

Testing Manual Systems with Automated Trading

  • Automated trading can be used to test manual systems through backtesting.
  • Backtesting estimates trading results based on historical data, and algorithmic systems can execute it quickly.
  • Traders can convert manual systems into automated trading, conduct backtesting, and optimize systems before implementation.

Benefits of Testing Manual Systems with Automated Trading
  1. Quick and Easy Simulation: Allows for quick and easy simulation of trading results.
  2. Elimination of Unsuccessful Strategies: Eliminates strategies that do not yield satisfactory results.
  3. Strategy Performance in Different Situations: Observes how strategies perform in various market situations.
  4. System Optimization: Optimizes the system before manual or automated implementation.
  5. Automated Trading with Own System: Converts manual trading systems into automated ones for automated trading.

Automated Trading Using Expert Advisors (EAs)

  • Expert Advisors (EAs) are placed on trading accounts and perform tasks according to trading rules.
  • EAs can operate 24 hours a day, 5 days a week, overcoming the limitations of manual trading.
  • Using EAs can enhance the reliability of manual trading systems through accurate and efficient testing.

Testing manual systems using automated trading, such as expert advisors (EAs), can provide significant benefits in terms of simulation, elimination of ineffective strategies, and optimization of trading systems. Automated trading is not only efficient but also allows traders to trust the reliability of their systems before applying them manually or automatically in daily trading activities.

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