In the world of online trading, keen market insights will only take you so far. Eventually, even the most successful online traders will find that their profit margins are stagnating. This has nothing to do with trading strategy but underlines the limitations of taking a manual approach. Fortunately, you can break through this bottleneck by embracing the potential of automated trading. With the right platform, automation can dramatically increase trading efficiency, allowing you to engage with more markets and reap bigger rewards.
Automated Trading Explained
While there’s profit to be made with a traditional trading strategy, this antiquated approach has many limitations. Automated trading bulldozes these barriers, utilising computer programs to execute trades automatically. Whether it’s buying or selling, automated systems follow a set strategy outlined by the traders themselves.
Relinquishing control of a computer can seem daunting for some, but the process isn’t as autonomous as it first seems. Before automation can begin, traders need to provide criteria to a system. This sets out basic rules for the execution of trades, with automated systems then primed to take over the rest.
For most traders, the biggest barrier to profitability is a finite amount of time. Monitoring markets and performing analysis is an intensive process and can dominate the schedule of the average trader. At best, you’ll limit yourself to a few smart investment decisions yielding a nominal profit. At worst, knee-jerk decisions made at the eleventh hour can derail your strategy and diminish your portfolio.
When you use an automated trading system, all of these issues are removed from the equation. Lucrative investment opportunities are identified for you, saving you countless hours studying the markets. Have you fallen into the trap of emotional investing? Human traders tend to react to short-term movements in the market, but automated trading systems do not.
Leveraging the Potential of Automating Trading Systems
Eager to get started with automated trading? To begin, you’ll need to select a suitable platform. There are plenty of options out there, with the likes of MetaTrader 5 proving incredibly popular with professional investors. If you want to get the most out of automation, it’s best to use a virtual private server (VPS) when trading online.
Once you’ve chosen your trading platform, you’ll need to outline entry and exit criteria so that the system can execute trades on your behalf. However, the process is far more involved than this. Automated systems look to key technical indicators like the relative strength index (RSI) to study momentum. The moving average is another useful indicator used by automated systems.
Fundamental analysis is more complex, relying on a far wider pool of data. Many news sources are scoured for insights, with the most relevant relating to interest rate changes, key industry developments, and articles covering major geopolitical events.
An experienced trader may know where to source the most credible news stories and which technical indicators are most relevant, but they’ll never be able to match the speed and comprehensiveness of an automated platform.
The Advantages of Automated Trading
It’s understandable why so many traders are resistant to the idea of automated trading platforms. That being said, if you want to start building your portfolio and take your trading activity into the upper tiers, there’s no avoiding these tools.
The obvious benefit of automated trading is that you’re no longer bound to a strict schedule. Even if you’re someone who spends most of your day studying computer screens and checking news articles for economic insights, there comes a time when you need to sleep. When you embrace automation, you can significantly increase your number of daily trades. With more time on your hands, you’re free to explore other investment opportunities.
Have you fallen into the short-term trading trap? While there’s money to be made with day trading and the likes of scalping, both strategies are time-intensive. Spend too long studying the markets, and you can find yourself rushed to a last-second trading decision. While some of these trades pay off, many don’t. An automated trading system can identify and exploit the best opportunities far more efficiently than a human ever could.
Keen to diversify your portfolio? Limit yourself to manual trading, and you’ll never be able to capitalise on a full range of assets. With an automated trading platform, you can finally start venturing beyond forex trading and investigate options and futures for the first time. Eager to see what crypto trading can do for you? With automation, you can do just that. A diverse portfolio isn’t just a healthier one, it’s also a more secure one. By spreading your investments across multiple asset classes, you’re mitigating risk and providing yourself with a safety net.
Start Your Trading Journey with Automated Platforms
There’s always been a steep learning curve involved with online trading. Along with mastering trading techniques and getting to grips with the market, some degree of failure is considered par for the course. Using an automated trading platform can seem like cheating, sidestepping much of the learning process entirely. However, the benefits of automated platforms far outweigh any of these implications. If you want to tap into more markets early on in your career, they’re an obvious route to success.
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