In simplest terms, algorithmic trading represents hands free trading. You establish the rules of the system in accordance with the level of risk you can bear (or let someone establish it for you if you’re using someone else’s automated trading system), and then you sit back and let it happen.

 Hands Free and Tested

The people who designed the system will continue to refine it as it runs in real-time to be sure it stays in line with the overall market condition, so that in the longer term, it should become increasingly effective, and capable of successfully trading the ever changing market conditions.

The importance of the continued testing and refinement cannot be overstated, and this is something that would be very hard for you as an individual investor, to accomplish. The amount of research that would be required (to say nothing of the cost of the various subscriptions to proprietary sources of data) would simply be excessive on an individual level, and this does not even get into the amount of mathematics and data crunching that would be involved, or the time it would take to accomplish it all. All of that to say that using an existing algo system from a group that is dedicated to ongoing testing and performance is essential if you mean to utilize algo trading.

No Emotions Are Involved With Algo Trading

The other major reason that algo trading systems are good for you is the fact that they remove emotion from the trading function. Let’s face it, when you see an important event on the news that you know will have a major financial impact, you almost can’t help but react emotionally to it. That is all well and good. By all means, react away, but when you do, just be sure that you are not allowing your emotions to get in the way of your investing decisions. There’s no place in the world of investing for emotions. Leave them out of the equation. Be cool and calculating in your investment decisions and you will succeed. Panic and sell at the wrong time and it could take you years to recover. Depending on how bad your loss, you may never fully recover from it. Don’t be that person.

The bottom line is that algo trading systems are here to stay. They’re the wave of the future, and are gaining in popularity with each passing year. Their solid track record and level of success is without question and they are slowly replacing human traders, because everyone is looking for an investment edge and you should be too.

Don’t be left behind. There’s no reason why you should suffer from sub-par returns simply because your emotions get the better of you. Level the playing field. Get an advantage of your own with our algo trading systems.

Chris Vermeulen