Automated Trading

Are you not available when there is a good buy or sell opportunity in the markets? Are you not disciplined enough, or make emotional decisions which causes you to take profit too early or take losses too late? Or don’t you like being stuck behind your computer?

Automated trading

What is automated trading?
What are the downsides?

Automated trading might be something for you! It trades completely independent, which means that it opens trading positions, places a stoploss, takes profits at different levels and completely closes the opened trade.

All you have to do is look at the end of the day, week or month what trades the system did. Some programmed trading-plans that have been automated make good profits. But like every other method of trading and investing it can also lose and cost you your investment! 

What is automated trading?

Automated trading opens and closes, like copy trading, trading positions by itself. Although unlike copy trading, this happens by algorithms, instead of professional traders you’re following.

Automated trading involves algorithms which have been programmed to open and close trades based on a pre-programmed “trading-plan”. It has been used for a while by hedge funds and banks. There are a variety of different algorithms used to trade automatically, based on technical indicators, trend-following systems or high-frequency trading systems. These automated trading systems can stick to their pre-determined trading-plans without emotions, which can make them highly profitable.

So what are the downsides?

To create a profitable trading-bot, programming and trading knowledge are required. Once the algorithm/bot is created, it requires lots of testing before being able to apply it to a market with a real money. This can be costly. If you don’t know how to program, or don’t have the trading knowledge you’d have to buy a trading bot. Which can be costly, or often requires paying a monthly fee.