Thanks to continued advancements in technology it's now possible to run a multi account trading fund out of the basement of your home. As a result, interest in automated trading is on the rise as individual traders look to be their own self-appointed fund managers. Here are a few reasons why: 1. Isolate yourself from your emotions As humans, we are emotional beings and often find ourselves driven, involuntarily, by emotions that override common sense or logic. Two fundamental emotions that all traders will experience at some point are fear and greed. When things do not turn out as expected we become worried and gripped with fear of suffering losses and this affects the way we trade. Similarly, when things go well and according to our expectations, we become greedy and overconfident which inevitably leads us to take on more risk which, at some point or other, is most likely to result in failure on a large scale. By surrendering your trading to a computer you can avoid making emotionally-driven mistakes. A computer doesn’t think, get angry or sad, it just follows orders and only executes when the rules and criteria of the strategy it is following are met. This is likely to save you from lots of bad trading decisions over time. 2. Reduce Data-overload The extreme amounts of price-, indicator-, macro- and political data constantly being produced makes it near impossible for the independent trader to process the data adequately. As a result, most traders stick to trading only 2-3 pairs in order to gain experience and optimize their chances of successful trading. This is however not ideal as many attractive trading opportunities in other markets may well be missed. Letting a computer monitor the markets for you will alleviate this problem and help you identify trading opportunities and trends to design your strategy around. 3. Decrease Your Reaction-time The markets can often become volatile and difficult to trade at times of key data-releases or major political events, central bank meetings etc. Reaction-times in these situations can often mean the difference between a winning and a losing trade. While market liquidity is always an external factor that cannot be alleviated, using automated trading systems will give the trade the best possible chance of executing his/her trades quickly and efficiently which is likely to have a considerable positive effect on the long-term trading results. 4. Trade at all hours The futures market activity literally moves around the globe alongside the sun and is open 24 hours a day on all weekdays. This makes is rather difficult for retail traders to monitor the market efficiently and many trade opportunities are missed while the trader is at work, asleep or away from his internet device. Automated trading solves this problem as the computer is always on and readily monitors the markets round the clock. 5. Stick to the plan The best way to make any decision in life is to do so when one is calm and focused. When it comes to futures trading, rash decisions made ‘spur of the moment’ are most often the wrong ones and this type of behavior should be avoided. The key to long-term trading success is to patiently analyze the markets, identifying strong trends that are likely to repeat themselves and designing a strategy around that. As mentioned above, the trouble is that our ego and emotions often get in the way of good trading discipline and makes us stray from the plan. Automated trading solves this problem very easily; the computer stays the course and only trades if/when the criteria of your strategy are met. No more – no less.
Conclusion Every trader is different; the obvious variables being experience, time available to trade, psychology and risk appetite. As described above, automated trading brings lots of advantages and really it is only your own imagination that sets the boundaries for what the possibilities are.