(Boursier.com) — Automatic trading works using powerful algorithms… However, these platforms are not suitable for all trader profiles with regard to the services offered by online brokers.
1/ Automatic trading: for traders looking for efficiency in their transactions
This process has several names: trading program, trading robot, Expert Advisor (EA), automatic trading. This is a computer program that carries out stock market transactions according to predefined parameters…
Automatic trading has several advantages over an online broker:
- To the extent that it executes a trading strategy defined in advance, automatic trading frees itself from the management of the investor’s emotions. A robot does not experience the stress, euphoria or hesitations specific to stock market activities. He also reacts faster than humans as soon as a trading signal appears when entering or exiting a position.
- Trading robots are particularly effective in monitoring many trading markets. simultaneous way 24/7. Their possibilities are almost unlimited where a human can only effectively follow a few markets at a time…
- Automatic trading forces the investor to define his strategy before programming. This makes it possible to simplify and master a strategy in depth.
- Once your program is created, orders are executed without human intervention. In this respect, the investor’s efforts are therefore less compared to “manual” trading.
- The relevance of an automated strategy can be tested using Backtesting. This technique makes it possible to verify the results that would have been obtained under real past conditions. This allows the investor to highlight the strengths and weaknesses of their strategy without using “real” money.
2/ The advantages of online brokerage: support and expertise
The creation of a Expert Advisor specific to an investor is aimed more at traders experienced. Indeed, defining a stock market strategy requires knowing the financial markets well.Converselyone of the strong points of online brokers is the support for investors:
- For beginner traders, the best online brokers provide educational materials such as webinars and videos.
- Brokers provide traders with tools to promote a good understanding of the markets.
- A good broker is always available to answer their clients’ questions (online chat, telephone, etc.).
- Online brokers are experts in financial markets and are able to advise their clients on the options to take.
- Using a broker makes it possible to take market developments into account, which a robot does not do… This flexibility reduces the risks linked to the strict application of a predefined strategy. This is a real advantage, especially if you speculate using complex leveraged instruments such as contracts for difference (CFD).
- Users of auto trading platforms must have programming skills to create and maintain their program. Otherwise, it will quickly become obsolete. If you do not have these skills, hiring a professional will be necessary.
Defining the best option between EA and online brokerage therefore depends on your experience, your objectives and your aversion to risk…
©2023 Boursier.com