An automated trading system (ATS) is a computer trading program that automatically submits trades to an exchange. As of the year 2010 more than 70% of the stock shares traded on the NYSE and NASDAQ are generated from automated trading systems. They are designed to trade stocks, futures and forex based on a predefined set of rules which determine when to enter a trade, when to exit it and how much to invest in it.
An example of an early ATS is Instinet. This allows traders to input trades invisibly to the market, with a crossing price determined by a VWAP measure. Instinet also enables anonymous conversations and negotiations to take place between bidders, and so reduces informational costs to the participants.
Trading system designers / programmers often test their automated trading systems on historical or current market data in order to determine whether the underlying algorithm guiding the system is profitable or not. Backtesting software are special trading platforms which enable trading system designer to develop and test their trading systems on historical market data while aiming to produce optimal historical results.
Famous quotes containing the words automated, trading and/or system:
“Now, as always, the most automated appliance in a household is the mother.”
—Beverly Jones (b. 1927)
“His farm was “grounds,” and not a farm at all;
His house among the local sheds and shanties
Rose like a factor’s at a trading station.”
—Robert Frost (1874–1963)
“In the course of the actual attainment of selfish ends—an attainment conditioned in this way by universality—there is formed a system of complete interdependence, wherein the livelihood, happiness, and legal status of one man is interwoven with the livelihood, happiness, and rights of all. On this system, individual happiness, etc. depend, and only in this connected system are they actualized and secured.”
—Georg Wilhelm Friedrich Hegel (1770–1831)