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How Automated Trading Can Increase Your Trading Profits
Have you ever wondered how you can automate your trading strategies and increase your trading profits? In this article we’ll cover the basics of algorithmic trading (AKA trading bots), the benefits, and the risks. Get ready for Automated Trading 101!
A lot of technical analysis involves watching indicators for signals, and then trading based on the signals. As I’ve discussed in a previous article, “One Behaviour That Puts Great Traders Above The Rest”, you should be noting down all of your trades in your trading journal, and as you gain more experience you should be able to identify the setups that make you the most money.
What if you could program a computer to automatically identify these setups and enter trades automagically? What if you could free yourself from the tyranny of the charts?
“Impossible! Technology can’t replace the skills and experience I’ve built up over 20 years sat on my ass watching charts all day!”
— Some baby boomer Twitter chartist
Alright, I’ll admit it. I made that quote up.
You got me.
Haters will say it can’t be done, but they’re wrong. It can be done.
The amount of financial data available is astounding. You can get the price feed directly from most cryptocurrency exchanges via their application program interface (API), and, as you might expect, it’s just a bunch of numbers.
Unsurprisingly, computers are way, way, WAAAAAAAAAY better than humans at doing math. If you can identify the setups that make you the most money, so can a computer. We’re talking about technical analysis here, not fundamental analysis, that’s a whole other kettle of fish.
A guy I keep banging on about, Ed Seykota, had a pretty good run in the 70s and 80s. He pioneered systems trading, and racked up gains of 250,000% over a 16 year period in his model account. And yes, that’s the correct number of zeroes.
