Increase Your Trading Profits with Automated Trading
Posted: May 16, 2019
Why do people trade? They trade to make a profit. If they’re not profiting from trading, then it won’t take them long to quit. While trading the stock market seems lucrative, it is anything but. If you don’t play your cards right, you could quickly lose a lot of your hard-earned money. However, this is changing with the advent of trading technology.
Previously, people depended on their own trading acumen and some luck to trade the stock market profitably. At times, this would make them a profit but often it would result in a loss. However, this has changed with the introduction of automated trading.The Growing Popularity of Automated Trading
Today, automated trading is evident in the trading of financial markets everywhere. Substantial volumes of trade are being executed using automated trading systems. Additionally, an increasing number of traders are embracing these systems today for the convenience and accessibility they offer. They are also adopting them to increase their chances of trading the markets profitably.
How does an automated trading system help to increase trading profits? By allowing you to set specific rules for entry and exiting trades. You can also program the trades to allow them to execute electronically. Also known as algorithmic trading, automated trading involves the use of computers to execute trades. The set of instructions given to the computers to execute traders are quite simple. For example, the computers could be asked to execute trades based on moving average crossovers.
Automated trading is ideal for novice traders who have little knowledge of trading or the financial markets. It is also helping many experienced traders to trade the markets profitably. This is because automated trading relies on intelligent algorithms rather than human acumen to making trading decision.Automated Trading vs. Manual Trading: What’s the Difference
In the past, automated or algorithmic trading was available only to big houses, brokers, and institutional traders. However, today retail traders can also take advantage of it. In algorithmic trading, all trades are executed using an automated stock trading software. The software executes the trades based on an algorithm coded in a programming language.
Not only does an automated stock trading software have an edge over human traders, it also has the edge over traditional trading software. This is because it is an automated, intelligent trading software. One of the best ways to trade the stock market is using an intelligent, algorithm-based trading software.
However, you must make sure that the software you are using is actually an AI stock trading software. I say this because most people don’t really know what an algorithmic intelligence (A.I) trading software actually is. No, it does not include every ‘automated trading software’ out there. Instead, it is a trading software that makes accurate and timely stock market predictions by using uses proprietary algorithmic intelligence (AI). It can also help you to minimize your stock market losses by identifying your trading risk.
With that clear, you may want to know about some of the advantages of using an AI stock trading software. There are several advantages of using automated trading over manual trading or traditional trading software. This includes, but is not limited to, ‘no emotions in trading’, accuracy, and faster execution of trades. However, following are some of the main reasons for you to transition to automated stock trading:1. Increase the Number of Profitable Trades
As I said at the beginning, the goal of trading is to make profits. With automated trading, you can increase the number of profitable trades to grow your worth. Wins and losses occur simultaneously in trading. To make your efforts and money count, you need to be profitable enough times to compensate for the losses you’ve incurred. Automated trading can help to ensure this.
In addition to the above, an automated trading system can prevent big trading losses by automatically generating trailing stops and stop-loss orders when a trade has been entered. The trading software also generates profit targets immediately after a trade is entered. The purpose of this is to protect and maximize the investment of the trader.2. Discipline Trading Decisions
While there is nothing wrong with acting on ‘gut’ feeling in trading, this often turns out to be the wrong decision. This is mainly because fear and greed are involved in decisions made based on gut feeling. In automated trading, there are no emotions involved. Instead, the trading software follows pre-decided rules for entering and exiting trades. This helps to prevent the avoidable losses that are incurred due to emotional trading.3. Trade Diversification
The third and final reason to make the shift to automated trading is trade diversification. With an automated stock trading software, you can trade multiple accounts or multiple strategies at the same time. What is the outcome of this? A diversified trade having risks spread over several stocks. While diversifying trades manually is also possible, it takes a lot of time. On the other hand, an automated trading software can identify opportunities across stocks within a few seconds.
While it’s true that you will need to completely change your approach to trading before you start using an automated trading software, it will be totally worth it. This is because of all the advantages offered by an AI stock trading software.
Samantha Jones is a blogger that has a passion for writing. She publishes content on various topics ranging from tips for event planning and interior designing to technological advancements and financial tips.