Automated trading of stocks and FX Advantages and Disadvantages

Some people are saying that "automatic trading tools don't make money" and "there are many fraudulent apps," so many people are worried about not being able to implement them.

This time, we will introduce the advantages and disadvantages of automatic trading tools.

Investments such as stock investment and FX (Foreign Exchange Margin Trading) are generally discretionary transactions in which investors themselves place buy and sell orders from their PCs or smartphones.

Nowadays, there are a variety of order methods such as "limit order" and "stop order", so it is possible to do semi-automatic trades such as "buy when it goes to 〇 yen, sell when it goes to ▲ yen", but it is still the trader who places the order himself. Become.

In contrast, ``automatic trading'' involves programming predetermined trading rules and automatically repeating order placement. There are paid and free tools in the fields of stocks and FX, and it is also called "system trading".

There are two main types: the ``program selection type,'' in which the investor selects a program (EA), and the ``program development type,'' in which the investor sets the program himself.

In most cases, the products themselves are provided and sold on the Internet, or securities companies and FX operators provide them as a service to customers. If you have knowledge of programming and finance, you can create your own, but few investors will take up this challenge due to the time and cost involved.

The advantages of automatic trading are various, such as ``It doesn't take up much time because the trading is left to you,'' ``No need for technical analysis,'' ``No need to be emotional,'' and ``No need to time the trades.''

It is especially difficult for busy business people to find time to trade. Since the trading hours for Japanese stocks are during the daytime, which coincides with my work, automated trading that trades on my behalf is a blessing.

Although you can trade FX 24 hours a day on weekdays, trading after the evening takes away from your private time. Automated trading solves these problems.

In addition, if excessive losses occur during trading, traders may make incorrect buying and selling decisions, but automatic trading follows rules, so there is no need to get emotional.

On the other hand, this does not mean that there are no disadvantages.

No matter how many trades you entrust, you need to regularly check the operating status, and depending on market conditions, it may be necessary to stop automatic trading.

In particular, when market prices suddenly change due to sudden changes in the financial and economic environment, the system you have selected may not be able to cope with the situation, and you may find yourself with a large amount of unrealized losses. In such cases, you must stop automatic trading in advance.

In addition, there are multiple programs available for automatic trading services, and each program has different characteristics, such as ``easy to make money with trending prices'' and ``good at contrarian trading''.

The system will not make you money unless you choose the one that matches the current market conditions, trends, fundamentals, and other price fluctuation factors.

If you compare buying and selling by yourself to a player, automatic trading is like a supervisor who selects the best one according to the situation from systems with different characteristics. We have to take that stance.

No matter how good a system has been in the past, it will not necessarily be the same in the future and may incur unrealized losses. It doesn't necessarily mean you'll make a profit right away, and you'll need to be able to manage your business with patience. Additionally, automated trading provided by securities companies may have higher fees than discretionary trading.