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.
Automated trading is an attractive service for busy or emotional people, and can become a partner that can successfully earn money on their behalf.
On the other hand, automatic trading is not suitable for people who seek the thrill of trading or who are not good at managing funds and aim to make large sums of money in a short period of time. Please keep these points in mind when deciding whether to use it or not.
If you are actually getting started, unless you are developing your own system, use an automatic trading program like the one below.
Program type: A program with buying and selling logic such as "buy when the golden cross" occurs. Since we trade according to certain rules, we do not trade at other times.
Repeat type: A program that repeatedly buys and sells, such as "buy dollar yen every 10 sen, and take profit when the price rises by 5 sen from the purchase price." It is often offered in FX.
Trader type: A program that generates buy and sell signals based on traders' transactions. It is characterized by being able to directly copy the methods of excellent investors, but if that investor falls into a slump, those using automatic trading programs are also exposed to risk.
There is no clear answer as to which type is better, so it is best to try several types and narrow down the one that suits you best. Also, you don't have to decide on just one; you can change the one you use from time to time.
What you should pay attention to is automatic trading performance. All services tout their good performance, but as mentioned earlier, that is just a thing of the past.
It does not necessarily match the current market price, and malicious operators may adjust the parameters to achieve convenient performance. I would like to test it myself before using it, such as by trying it out on a demo trade or referring to reviews on the internet.
Automated trading, which trades according to rules, is also characterized by evolving day by day. Investors should be relieved that excellent programs will remain, but those that are not performing well will be withdrawn from the service.
In recent years, there are also services that utilize AI to analyze market conditions and automate everything from building buying and selling strategies to trading.
In general automated trading, the market analysis is done by the investor himself, but AI automated trading covers that, allowing for trades that are more in line with market conditions. If you want to do advanced trading, you may choose a service like this.
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