Mar 11, 2019

5 Reasons Why Trade Automation Increases Profitability

Written by Katie Gomez

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This is a guest blog post from Alexander Voigt of Alexander’s been an active Trade Ideas subscriber since 2009.

With the power of technology at their fingertips, traders nowadays are capable of reaping way bigger returns than in the past. Automation has come to transform financial markets and significantly improve trading performance.

Faster execution, better precision, reduced risks, and automated trading systems are the modern trader’s best friends.

Here are 5 reasons why trade automation is capable of increasing profitability:

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Takes emotions out of the picture

As humans, we are prone to biases and letting our emotions take control over our decisions.

This is a way bigger problem in trading, when compared to other fields, as buying and selling decisions are usually taken in stressful situations where it is way harder to keep your head cool.

By automating the trading process, we are capable of taking some of the emotion out, thus make more reasonable choices or even leave computers to make decisions upon pre-defined instructions and when a certain criteria are met.

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Improves trading speed

One of the main differences between human traders and automated trading systems is the capability of the latter to respond instantaneously to market dynamics and changing conditions.

For example – a trader can miss when a certain criteria for triggering a buy or sell order is met due to dealing with other tasks or inability to monitor his dashboard all the time.

On the other hand – computers act immediately when an event, recorded in their pre-defined instructions takes place. And in today’s market realities, getting in or out of a trade a few seconds later can significantly decrease your returns.

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Allows you to backtest your strategy

Backtesting is one of the main benefits that automation has brought to trading. The chance to apply a strategy and test it on historical data to see how it would have performed is something that was impossible just a few years ago.

However, today backtesting historical scenarios is just another advantage through which trade automation increases profitability. The idea of backtesting is to design, tailor and adjust all factors for your strategy and test its efficiency with no risk.

That way, traders can improve the adopted investing methodologies and reach their optimal states before going live and trading with real money.

By fine-tuning and adapting the trading strategy, individuals can closely predict the expected amount of profit or loss initially, thus ensure better risk management.

See Also: Gap and Go Strategy Review (Step by Step Tutorial 2019)

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Enhances your trading style through diversification

Thanks to automated trading systems, individuals can get involved in multiple trading sessions at once (through managing more than one accounts) or apply various strategies simultaneously.

That way, one can easily diversify his portfolio by spreading the risk over a set of assets, while at the same time ensuring a safe hedge against expected losing positions. Without the help of automation, human traders are unable to do all that at once, at more importantly – manage the execution of all operations for less than a second.

By being able to spot potentially-profitable trading opportunities across a wide range of markets, place orders and monitor trades, trade automation has the potential to significantly increase one’s profitability.

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It is now the reality you should keep up with

Although there are still traders who are not entirely convinced by automation, the truth is that today almost 75% of all trading is handled that way on all the stock exchanges around the world.

In a world where trades are almost entirely automated and robots are helping with the analysis and the decision-making process, failure to improve and further develop the new-age financial skills is non-sustainable.

If one refuses to keep up with the industry and improve his trading style via automated strategies, he is simply deliberately acknowledging his will to be left behind.

See Also:

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Trade automation increases profitability tremendously thanks to its ability to optimize the trading speed, performance efficiency and risk management strategies.

Without the help of automation, financial markets nowadays would not have been such a developed and efficient environment.

And most importantly – investing would not have been such an affordable activity, available to each and everyone, no matter of their location, capital or experience.

From market scans based on your parameters to high-speed backtesting capabilities for your trading strategies, up to automated trade execution, Trade Ideas provides all the functionalities you need to automate your trading. Start today and automate your trading now.

See also: Is A.I. based day trading the future?