For whom and when can automatic trading tools be useful?

January 17, 2022 (Investorideas.com Newswire) Given the abundance of new retail traders joining the industry, one should know that this endeavor requires specific knowledge and skills, if the objective is to achieve consistent results. Also, this set of skills cannot be acquired overnight and until beginners manage to reach consistency, alternatives must be found.

Added to that, the recent weakness in stock markets and other financial markets should be another incentive for traders to look for ways to sharpen their decision-making process. One of the solutions is automated trading and the current article will analyze for what type of traders, and when, it's best suited.

Growing involvement of retail traders

Experts view the growing interest in online trading coming from the retail side as an opportunity. One of them is Philippe Ghanem, Chairman of SquaredFinancial, one of the trusted retail brokerages in the industry. Here is what he recently said in an interview:

"Online trading has grown exponentially in the past years, especially during the pandemic when people had more free time and had to think about finding new ways to earn their living, to make some extra money. Despite the volatility that the markets are witnessing, the uncertainty caused by continuous lockdowns, and the political unpredictability in some major countries, people are getting more into digital trading and the whole landscape is becoming heavily populated. The impact of the pandemic on the markets is ongoing."

With more and more people joining, the question remains how they can develop methods and techniques to succeed in a challenging environment. Although the abundance of information available online does provide help, trading is more of a mental process, which drives traders towards automation.

When is trade automation suited?

Putting the trading process on autopilot can be useful in case traders don't already have a system that produces consistent results. Companies like SquaredFinancial offer the ability to copy trades placed by other expert traders, all thanks to advanced technologies developed over the past few years.

On the positive side, this is an opportunity to get access to professional views on the markets, while also saving time that could be required for proper market analysis. Some brokerages offer copy trading services free of charge, which makes them affordable for a wider audience.

Autotrading can be efficient if traders also know how to pick ‘role models' who are consistently generating returns, without large drawdowns. Ultimately, it's possible to trade commodities, stocks, or even cryptocurrencies, depending on one's appetite for risk.

Pros and cons need to be weighted

On the flip side, traders need to be aware that, when joining such programs, they give up their ability to affect the decision-making process almost entirely. It's possible to pause and exit at any point in time, but while the trading account is connected, trades are automatically copied.

As a result, autotrading systems are good not just for copying successful traders, but also for receiving live feedback in the open market. Beginners who study how trades are being placed can understand the process behind the moves and ultimately learn how to do everything by themselves.

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