Automated trading is attracting an increasing number of traders. But is it an excellent alternative to manual trading? Since the goal of any trader is to make money, the question that remains is which of the two methods enables the best trading performance. To answer the question, it is necessary to understand the advantages and disadvantages of automatic trading.
Can automated trading improve your trading performance?
Auto-trading counts many advantages. The primary advantage of automated trading represents the automation of entry and exit trading positions. It enables a trader to spend less time in front of a computer screen and therefore has more free time. It is, therefore, a comfort advantage that is given here.
The other significant advantage of automated trading is that your trading strategy works around the clock. All buy/sell signals are used. You no longer miss any trading opportunities. If your trading strategy is a winner over the long term, automatic trading allows you to generate more performance. Indeed, if you have, for example, 2/3 winning trades with your strategy, the more trades you place, the more you earn.
To get to the same outcome with manual trading, you need to devote more time to trading activity or increase your positions. But the increase in leverage can lead to greater risk.
Does automated trading eliminate emotions while trading?
Emotions are one of the main loss factors for novice traders. There are winning emotions of greed (greed) and euphoria (feeling stronger than the market after a string of winning trades). There are emotions related to losses, such as frustration, anger, depression, panic, and fear of loss.
When trading manually, you are submerged in all of these emotions. It is, therefore, a factor that can strongly affect your trading performance. However, all the emotions associated with losses are often due to the lack of risk management. If you apply strict risk management rules to all of your trades, you are no longer subject to these negative emotions.
With automated trading, you are only dealing with the emotions related to the gains. Indeed, if you start to win, you may be enticed to increase your positions in order to earn more, as is the case with manual trading.
Regarding the emotions related to losses, you do not experience them if you aren’t in front of the computer screen. Thus, you must strictly apply the risk management rules to your trades or risk suffering heavy losses.
Finally, when it comes to risks, when opting for automated trading, your first concern should be the choice of reliable software. The market has been booming lately, and making a choice could be harsh.
That’s why it’s advisable to read many reviews to see the opinion of the experts. BitiCodes review, for instance, gives a thorough overview of the Biticodes recently released trading software. Another way to check the software’s performance before opting for it is by reading trading forums. There you will find first-hand tips and advice regarding the software that draws your interest.