If we look around us, technology has been evolved a lot/or by manifolds. In the financial world, trading in the stock exchange has evolved from physical trading to systematic trading.

What is systematic trading?

Systematic trading includes all the decisions of trade based on a particular system. This system promotes rule-based trading. In the trading world, there are two kinds of systems of analyzing stocks…

1. Fundamental analysis.

2. Technical analysis.

The biggest disadvantage of fundamental analysis is that there is no sure shot guarantee for profit and it is time-consuming as well. Technical analysis on the other hand is the advanced version of a trading system, this too creates a lot of confusion. For example – on one screen it is showing buy particular security and on the other screen, it is showing to sell.

Instead of choosing any particular methods for trading, we should rather go for a hybrid approach.

Importance of system-based trading.

• Helps to earn consistently: Many individuals who are trading are not able to earn consistently. System-based trading will help you to earn consistently.

• No room for emotions: Some people have an emotional bond with their stocks, in systematic trading, it eliminates the emotions.

• Focus: There is a lot of economic news in the stock market, it becomes very difficult to track all the information. On system-based trading, the main focus is to track the relevant information in the stock market.

• No human interference: As it is based purely on systems there is no human interference and it will reduce the risk and human error.