Why I’m moving towards system based algo/automated trading

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When it comes to trading, typical manual trading or also referred to as “discretionary-based” trading would involve some research and analysis, identifying potential setups, placing and managing trades and all the usual trading activities you would carry out as a Trader.

Trading in this way, of course, requires some dedication of time and effort in your day.

Don’t get me wrong I enjoy the process of manual trading, but when I discovered the world of system-based algo and automated trading, I was fascinated and mind-blown, to say the least.

Because it’s a method of trading that can potentially transform and change your life for the better.

And I also like the idea of systems and automation in general. Even when I was in my IT support career, I was always interested in ways to systemize and automate a process.

For example, working in Colleges, where you have to create hundreds of computer accounts each year for the new intakes, just imagine how much time-consuming it would be doing all that manually, creating each account manually!

Luckily we had automated systems in place where all the accounts were automatically created each year, without a single interaction from us IT Staff and they would work flawlessly, with no issues.

Let’s be honest, time is finite for us all, we have very short amounts of it, if you sit down and think about it, the bottom line is, life’s too short, trust me!

That’s one big reason, I like automation and systems, combined, because if I can free up even a minute of my time, that’s gold for me as every minute of our time is precious.

So when it comes to algo/automated trading, a lot of your important trading-related activities that you would do manually can instead be automated, saving you so much time and effort, thus freeing up that time to do other things in your lifestyle, be it personal and work.

For example, here are some of the processes that we can automate by leveraging algo/automated trading:

– Research and analysis – automated
– Finding potentially profitable trade setups – automated
– Placing and managing trades – automated
– Compounding/re-investing – automated
– Risk management – automated.

And here’s what you don’t need to do, on a typical trading day:

– You don’t need to stay glued to your computer screen researching and looking at charts
– You don’t need to monitor your trades
– You don’t need to have multiple monitors or heavy technology set up in your home.
– You don’t need to stress or get frustrated when trades are not going your way.

Another very important benefit algo/automated can provide is removing human interception, emotion and decision-making, which is crucial, especially when humans cannot control our emotions and feelings, particularly trading.

And these emotions can contribute towards our failure and of course success, but looking at the retail trader success rate being shockingly low, I think it’s fair to say, emotions may play a big part in a trader’s downfall and failure.

I’m saying this from my own personal experience, as when I trade manually my emotions and feelings influence my trading decisions, which on many occasions lead to losses and failure.

When I trade based on emotions and discretionary-based trading, here’s what I’ve done in the past that caused me to lose a lot of money:

– Keeping a losing trade open, disregarding the original stop loss.
– Revenge trading – when I’ve lost a trade, I’ll place a trade just to take revenge with the hope of recovering my losses, without doing any research.
– Recovery trades with big lot sizes – as I want to recover my losses and make a profit
– When there’s no trade setup, I want to trade just for the sake of making a trade

And I’m not lazy or anything when it comes to work and putting in the “sweat equity” and all that great stuff, but I’m passionate about working “smart” as well as hard.

Now look at the biggest advantages of algo/automated trading systems that I think I can and anyone can benefit from:

– Potential to earn passive income, on autopilot, 24/7!
– Free up your time, so that you can spend that time on other important things, in your personal – and or other income-generating ventures.
– Reduce your stress levels
– You can tap into several opportunities simultaneously as you’re manually dedicating your personal “active” time to one opportunity
– You can diversify your portfolio with little effort.

We’ve looked at the benefits, but they’re are also various downsides, here are some:

– Trading systems suddenly fail – because the market conditions have changed due to – – unexpected events, for example, an earthquake in a country causing a country’s currency to fall, on which your system had a trade to buy the currency!
– Computer malfunction on which your trading system is running.
– Losing strategies
– Cyber attacks on the systems you have your trading systems set up on

As we can see, there are advantages and disadvantages to algo/automated trading, however, I find the advantages more beneficial to me.

To sum it up, for all these reasons and benefits mentioned, I’ve come to a conclusion and realisation that I’d love to automate and systematise my trading as much as possible.

Now I’m not dissing discretionary-based trading or anything like that, because to each their own.

It’s just that after learning about the possibilities and opportunities available to systematise and automate trading, I’m more interested in systems and automation.

I’ve realised, this is what gets me excited and I find it more enjoyable to research and test algo/automated trading systems and strategies.

And also, we can potentially earn the holy grail of income, passive income and multiple streams at any given time!

Look out for more potential content on my journey and processes on algo/automated if you’re interested in automating your trading and the possibility of generating multiple streams of passive income:-)

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