Auto-Trading has been gaining in popularity over the recent years. One of the drivers behind this growth in popularity is accessibility; it has become a lot easier for investors to access auto-trading platforms and setup their own trading strategies. Auto-trading is also growing in popularity, because investors are starting to realize the benefits that come with this strategy.
Trading Without Emotion
For the average investor, keeping emotions out of investing is an extremely difficult task. The single most valuable advantage of auto-trading is that it takes emotions out of the equations. Greed and fear are investor’s biggest enemies, second guessing your trade due to emotions can be costly. With Auto-trading, all you need to do is setup your rules and leave the program do the rest, no emotions.
Investment Strategy Proof and Records
Wouldn’t it be great if you knew how your strategy would behave in the real markets, before investing your money? With Auto-Trading you can backtest your strategy against historic market data before risking your own money. Run your trades against different market conditions for a complete picture of your strategy. You can make tweaks and re-test till you are satisfied with your results. Backtesting is in invaluable tool in confirming your expectation.
Trading Consistency
If you have had a few bad trades in a row, you might lose focus not execute the next trade or fail to respond fast enough. No trading strategy will result in a 100% win, losses are part of the game; however, the psychological impact of a few losses or wins in a row can be detrimental to following through with the strategy. With Auto-trading, after entering the rules, your trades will always be executed when the criterion is met and you will achieve consistent results.
Automatic Discipline
Because the rules are set and actions are only triggered when the pre-set criterion is met, discipline remains even in a volatile market. You can have a great investing strategy, but greed for more and fear of losing too much can result in irrational behavior and loss of discipline. Auto-trading will execute your trades 100% of the time based on your rules.
Fast Reaction Times
Another great advantage of auto-trading is the speed at which the trades can be executed. Computers can execute an order within milliseconds of meeting the pre-set criterion, this, almost instantaneous, execution can provide significant advantages to you. Imagine the frustration if you miss a profitable trade because we could not react fast enough, with auto-trading all that is gone. As soon as a trade is executed stop losses, trailing stops and profit targets are immediately set, in a volatile market these can be a difference between profits and losses.