Humans have always excelled at using tools to do things better. Our ancestors used stone tools as knives, weapons, and writing tools. Factories today use automated manufacturing to produce more while minimizing error. Even mentally-taxing jobs are being taken over by machines for good reasons. For example, investors can use an automated trade manager to initiate orders in their behalf. They can tell the software what to do and this will be followed to the letter. This type of system can produce the following advantages:
Rational Decision-making with Every Trade
The stock market is volatile. Sometimes it behaves in ways that defy expectations. Movements can cause fear or greed, depending on the direction of the prices. It is difficult to make the best decisions when emotions take over. Machines and software don’t have any emotions. They will only follow instructions. As long as you provide them with carefully considered instructions, they will produce good results. At the very least, they will always implement rational decision-making instead of being led by emotions which people are prone to.
Faster Order Entry Speed to Maximize Opportunities
It is impossible for humans to spend 24 hours every day looking at stock charts to look for opportunities. Fully manual trading means having to accept limitations and letting go of possible opportunities. Many will at least try to get notifications on their favorites stocks so that they can act quickly when they see a window. However, humans will have to process this information, open their trading app, and decide the parameters of their order before anything happens. Even just a few minutes of delay can cost them dearly. An automated manager can perform all of these in milliseconds.
Higher Efficiency in Managing Multiple Positions
Manual trading is doable if you only have a few positions to manage. If you plan to grow your portfolio, then you can have difficulties trying to manage all of your assets. Automated managers can do this with ease thanks to the processing power of computers. They can multitask and do whatever is necessary with each asset. Every stock can have its own rule. It will be able to remember everything and never get confused.
Refinement Using Backtesting Before Live Trading
Since the actions of these automated trade manager are highly dependent on user-defined rules, they provide backtesting capability to improve these before going live. The rules can be used with historical data to see the results. If these is a poor outcome, then it can be tweaked to make things better.
