Automated Online Trading: To the average Joe, the world of trading would appear deceptively simple-press a button, and you can buy and sell securities within the blink of an eye. Of course, theories are almost never true in practice, and anyone who has spent some time in the stock market is acutely aware of the wide chasm that is ever-present between retail traders and their institutional counterparts.
For years banks and financial institutions have banked on complex algorithm based trades brought about by HFT software systems. For the most part, HFT systems have remained out of reach of individuals and small-time trader mainly because of the initial expenditure on hardware and software, as well as the large volume of capital investment required to keep an HFT system running optimally.
All that has changed in the recent past. Sure there is no way for retail traders to close the hardware gap between them and institutional traders, but the advancement of neural networks and automated trading platforms means that retail traders are now on an equal footing than they had ever been before.
Automated Online Trading
So how does having an automated online trading platform help a retail trader out? Let’s take an in-depth look at 3 of the primary advantages that automated trading platforms bring to the table and why they have grown to become a must-have arsenal in every retail day trader’s arsenal.
1. Copy Trading through Automated Platforms
One of the preconceived notions about trading stocks and securities is that it requires a lot of knowledge and skill. While this may have been true in olden days, with the advent of automated trading platforms, even newcomers into the field can turn over a tidy profit just by copying the trades which are being put in by stalwarts of the market. One of the best places for someone to start trading is through Forex MetaTrader 4 platform (aka MT4) as it guides the growth of a fledgling retail trader. Copy-trading, while not immensely profitable, is the first stepping stone to understanding the trading world while riding on the coattails of people who have already made it big as an investor.
2. Making Use of Social Trading
While copy trading may be well suited for turning in a quick profit, as one gains experience as a retail trader, there is an urge to experiment and branch out into newer avenues and try stocks from niches that are off the beaten track. This is where social trading kicks in as the presence of a social backbone mean that like-minded people can interact and share ideas with each other while they work. One of the primary benefits of having a social aspect to automated online trading is the fact that newcomers don’t ever feel alone, and there is always someone around to show them the ropes. However, even experts sometimes make the wrong call, after all, to err is human- and that is why we have specialized algorithms and trading bots.
3. Algorithmic Trading
Algorithmic trading is entirely data-driven, and this is why it is often considered one of the best forms of trading. While sophisticated platforms like MT4 always provide retail traders to come up with their own set of rules and trading parameters, the real brilliance of modern automated platforms lies in their predictive capabilities. Expert Advisor bots are incredibly advanced pieces of software that can crunch through an enormous amount of market data and come up with prediction models that are incredibly close to real-life trading scenarios. These trade bots can not only go through with a trade in the blink of an eye, but they can also provide statistical analysis as well as visual cues like graphs and charts that make realizing the market trends easier than ever before. While financial institutions and banks have had these systems for years, the recent improvements in machine learning and neural networking means that Algorithmic trading has taken automated online trading platforms by storm.
While we went into detail about these 3 factors, there are numerous other factors at play here. Automated trading platforms take the emotions and the rash decisions away from the retail trader and make sure that the plan is followed to the letter. Automated trading platforms bring about a sense of stability in even unstable markets, and it is because of them that retail traders are able to make their presence felt in the global trading scene once again.