Contents
There are many reasons why I love algorithmic trading. We’ll look at the different whys together, but what’s certain is that I love coding. It’s mostly the research side of it, testing out these ideas and seeing how relevant they are.
- Brainstorming;
- Seeing the relevance of a trading method;
- Automatic gains, time freedom;
- No overtrading, less stress;
- Good diversification;
- Rely on a trading algorithm for manual trading.
Brainstorming with algorithmic trading
Yes, coding doesn’t just happen 🙂 . You have to do a lot of research and testing before your trading robot is ready for use. This may well be due to the coding, simply to conditions that you’ve never coded before; I like that, because it allows you to learn something new. Or the problem may come from the automatic trading strategy; because when a trading algorithm is based on manual trading, you can’t include the human eye, its feeling when validating the trade. You need a systemic trading method.
See the relevance of a trading method
It’s a great advantage to have a trading method that can be coded. Even if manual trading can’t be fully coded. If our trading strategy contains enough conditions to code a trading algorithm, we’ll have an overview of the relevance of the trading signals provided. All that remains is to identify what needs to be refined manually.
Automatic gains, time freedom with algorithmic trading
Of course, freedom of time comes once the trading algorithm is complete 😉 . Once the automatic trading robot is up and running, we can detach ourselves from our screens. Positions will be opened and closed without human intervention. It’s a great way to make money and enjoy life at the same time.
Algorithmic trading eliminates overtrading
Since we’re not the ones placing the orders, there’s no risk of overtrading, which is a good thing if you don’t want to burn up your trading account. It eliminates the stress and psychological pressure of manual trading; this depends, of course, on the method used, the time horizon and the trader himself.
You don’t have to be addicted to checking performance every 2 minutes. We leave it up to the trading algorithm or algorithms, and we’ve tested them for a reason. Yes, there will also be losing trades, just like in manual trading.
Good diversification
In manual trading, the more methods and assets you use, the more nonsense it becomes. You can’t be everywhere at once, and spreading yourself too thin can only be counterproductive.
On the other hand, using several trading algorithms, based on different and complementary methods, is a very good solution. This will smooth out the portfolio curve, as each trading algorithm will have its strengths and weaknesses. Some trading algorithms will perform well in certain cycles, while others won’t take positions or won’t be great over the same period. The aim is for winning trades to be superior to losing trades. What’s more, by varying your assets, you increase your diversification, without having to exert yourself.
Relying on a trading algorithm for manual trading
By backtesting your trading method, you can help yourself by optimizing the signals delivered by the trading algorithm, by adding an additional analysis. The aim is for the trading algorithm to take care of the technical analysis, while we fine-tune the entry signal.
Why do I like algorithmic trading in 6 points?
So, we’ve seen the main points I like about algorithmic trading.
What do you like about algorithmic trading? Tell us in the comments.
Happy programming
Joseph Pergnan
