In an era where more and more working adults are familiar with basic programming and general IT skills, it's not surprising that automated trading robots are growing in popularity.
During the past decade, most of the top-rated online brokers began offering customized trade bot solutions to their customers. What's that mean for today's tech-savvy account holders?
For starters, it means they can build a securities trading bot from scratch. If that's not an option on their broker's platform, they can at least tweak one or more of the systems that come with their account. But what are the benefits of taking on this task? Why not just use the standard tools available or purchase a ready-made trading robot? The answers to those questions are related to control, potential profits, and many other factors.
Technical Trading Bots
If you possess the programming skills to get the job done, it's entirely possible to construct a fully functional auto-trading bot. The advantages of doing so are many, including the fact that you can customize the process based on as many technical and other parameters as you wish.
It's worth remembering that autotrading solutions are one way to spend much less time attending to the daily market action. Instead of being glued to the monitor for several hours per day, those with programming skills can set their bots to do 99 percent of the work. That includes monitoring securities prices, placing trades, managing current positions, and exiting trades when the time is right.
Trade Automation Solutions
Using your programming skills to customize bots is the way to go in today's highly technical securities marketplace. With hundreds of indicators available, there's still a need for personalizing a strategy. Suppose you discover what you believe to be a unique relationship between the volume of shares traded and price.
If your broker's platform includes features that allow for customization, it might be worth exploring the possibilities of creating an indicator from scratch. Just as mechanically inclined individuals build custom cars and trucks, it's possible to develop any number of indicators based on price, moving averages, range, volume, Bollinger bands, and dozens of other technical indicators. But the main benefit of developing a bot is that you can test it on vast quantities of data before ever going live and putting real money at risk.
As a Source of Income
Robot-based buying and selling offers the benefit of speed, first and foremost. Many amateur and expert programmers choose to create a half-dozen or more bots, deploy them simultaneously, and check in on them regularly. That kind of strategy makes it possible to aim for part-time or full-time income.
However, many tend to fall into one of two categories after they become interested in programming bots for market action. They follow either a set-it-and-forget-it approach or dive in and become full-time trading devotees.
There's no right or wrong way, but it's important for technically skilled individuals to decide how they wish to proceed after building their first few automated systems. For those who are willing to devote more than 10 or 20 hours per week to the endeavor, it is possible to build a steady income as an active, bot-based trader.
Pros & Cons of Automated Approaches
No matter how adept you are at creating customized trade robots, there are several pros and cons that go with the territory. It's not the fault of the designer or programmer but automated trading in general. It's well known that the primary edge bots offer is the ability to avoid emotional decision-making.
For more than a century, amateur and professional securities traders have fallen into a rut of allowing positive and negative emotions to override their mental decisions. Too many otherwise competent, intelligent adults tend to exit a position as soon as the price begins to fall.
They let fear guide their hand instead of following rules and stop-loss points that have already been set. There are multiple benefits of bot-based order execution for anyone engaged in the markets.
Automation delivers countless other advantages related to finding and pursuing potentially profitable trades. Other pros include the ability to perform backtesting on historical data to adjust the parameters of a system, super-fast order entry even when market action is moving quickly, and the chance to maintain multiple accounts simultaneously.
Drawbacks of bot-based dealing include the need to oversee the bots' activities regularly to make sure everything is running smoothly, the chance for mechanical problems and failures at the platform level, and the lack of guarantees that a given program will perform well or profitably.
