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Algo Trading 101
What Is an Automated Trading System?
“Automated trading system” (ATS) sounds institutional, but the concept is simple — and knowing its parts helps you judge any product claiming to be one.
NoVo Options Trading · 2026
An automated trading system (ATS) is software that handles the full trade lifecycle by rules — deciding, sizing, executing, and exiting — through a broker's API, without a human placing each order. Here's what one is actually made of.
The core parts
A data feed (the live inputs), a signal/decision layer (the rules that decide direction), a risk layer (position sizing, stops, exposure caps), and an execution layer (placing and managing orders). A weak link in any one poisons the whole thing (the pipeline explained).
What makes one good
The difference between a safe ATS and a dangerous one is the risk layer and the fail-safes. A good system has hard limits it can't override, a kill switch, and sane behavior when data goes stale or a connection drops (kill switches, a resilient trading loop).
The signal layer gets all the attention. The risk layer is what keeps you solvent. Judge a system by its guardrails, not its entries.
Non-custodial by design
A well-built ATS runs in your broker account via API keys — it never holds your money. That's the model to insist on (your money, your keys). See also manual vs automated execution and whether you need to code.
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NoVo is a software tool for market analysis and for executing trades you initiate, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.