Many traders get into trading because they view it as easy money they can make from home in their pajamas. This really couldn’t be further from the truth. I’m a full-time professional trader and before I created my unique method for trading, I struggled to find consistent success in the markets. Another huge myth is that trading is all about trusting your gut. Automated trading takes the guesswork and the human emotion out of trading. When you have the data and the numbers to backtest your trading decisions, you’re just going to be more successful, period.
Trading Is A Marathon, Not A Sprint
Day trading is something to take seriously. Everyone comes into trading with the goal of making money. But the truth is that you must be committed to learning as much as possible. And that dedication to learning doesn’t end when you start experiencing success, it just evolves. Part of being successful is continuing to stay abreast of market news and trends. Having the knowledge will make you more successful long term.
Trading is also not going to be an immediate solution to replace a lost salary and anyone who pretends this is doing it in bad faith. If you are new to the markets, you need to have an alternative source of income set up to safeguard your personal assets and financial responsibilities. Even if you find success quickly, it’s all about the long-term gains. It’s normal even among the most successful traders to go several months at a loss or to have gained for three months and in the fourth month, lose everything from the previous months. Trading can be fascinating, beautiful, profitable, and it can be a source of satisfaction, but it will never be a source of financial confidence.
Here are 3 Reasons Why Automated Trading Offers a Better Strategy Than Relying On Your Gut:
- You have the ability to test everything BEFORE you trade.
With automated trading, a lot of work goes into studying the markets before you do any trading. So while it isn’t easy or a quick fix, it allows you to simulate different scenarios that could happen before you go live on the markets. Having the ability to test your strategies is a huge advantage over other traders who are basing their decisions on a feeling.
If you automate your trade, you will also have a lot of freedom. Once you plan your trading, you have the ability to study it thoroughly with backtesting and analysis. Once everything is ready, all you have to do is monitor it. This allows having a lot of free time, which is, in my opinion, the greatest benefit of all. I truly encourage people to only start trading if they are passionate about it and enjoy it and not just all about making money.
- You have the insight to find edges on the market.
Traders who are able to find an edge experience much more profit in the long run, versus those who don’t. Even discovering a technique that will add a few points to the winning side is going to be profitable in the long run.
Automated trading means using a computer to study the markets, develop strategies, and let them run 24/7. Having past data at disposal allows testing how markets react to specific events (volatility increase, sudden drop, superrally, choppy periods, and so on) by simply simulating trades in the occurrence of the above-mentioned situations. The results of these trades show whether there could be an edge there, getting consistently positive results means there is something worth further investigation. A computer is fast at maths and can run multiple tasks at a time, there is a huge advantage in using software to test as we can gain an overview on past behavior covering years in just some minutes.
- Automated Trading Takes Human Emotion Out of the Equation
Human emotions are fragile and they are always changing based on what is going on in the world, what you had for breakfast, your mood on a particular day, and countless other outside influences. Trusting your emotions or your gut to guide you in your trade is a wildly unpredictable way to trade. Current data shows that roughly 76% of trading accounts are at a loss and 93% of traders quit after 5 years. You’ll need to find a method that’s more reliable than your emotions if you want to beat the odds.
Your motivation to trade must come from an interest in the markets and a true desire to trade. If you are just doing it because of a dream to become rich, the highs and lows of trading are going to take a huge toll on you emotionally. Having the passion to study the markets and apply what you learn, will give you perseverance through the highs and lows.
I’ve found success in trading long-term because I know it comes down to more than talent. It comes down to the method. When you have a method that is numbers and data-based, even traders without a particular talent are able to manage their systems on the market once they have an understanding of the procedure. Trading is not for everyone, nor should it be. It is an activity that gives results when you are willing to put in the time to study, test, and apply a proven method.
Written by Andrea Unger.
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