Trading can turn you into a millionaire. However, it can also make you lose a lot of money if you are not careful with your investments. You have to study the subject to have confidence in your moves. You have to make logic rule over emotions. As much as you want a certain stock, bond, ETF, index, or currency to move in one direction, it could go the opposite way for a number of reasons. You have to understand these reasons and learn from them. You also have to be quick to respond to market openings when they present themselves. These things can be achieve more easily with the help of an automated trade manager but you have to consider the following before making the jump:
Knowledge of Technical Indicators
An automated trade manager will take action based on the rules that you set up. It will only perform well if your rules are logical and optimized. Most of these will depend on technical indicators that present a snapshot of the market from a certain angle. You must know when these are helpful and when these are not. You should learn to ignore some and depend on a select few. These will all be reliant on your trading style. Long-term investors will look at different indicators compared to day traders.
Speed and Reliability of Trading Platform
One of the main reasons why automated trading is preferred by many is the fact that machines can move much faster than humans ever could. They can analyze the market and initiate a buy or sell in a split second whereas people might take hours to do the same. They can take advantage of even the shortest windows of opportunity. However, they can only do their jobs well if there are hosted on a platform that is fast and reliable. Compare speeds and uptime guarantees.
Mental Preparedness for Automation
Some people can relinquish control to software without much fuss. Others will take a while before they can establish trust with a program and allow it to pursue their trades. This is understandable given the risks involved. It’s best to take a conservative approach with the first few automated trading rules and see how it goes before taking more aggressive stances. Sometimes you might get the urge to take over and perform manual trades. There is nothing wrong with this but you will eventually have to develop a system that mimics your way of thinking so that you won’t have the urge to intervene.
