(Boursier.com) — Automatic trading works using powerful algorithms… However, these platforms are not suitable for all trader profiles in terms of the services offered by online brokers.
1/ Automated 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 executes stock market transactions according to pre-defined parameters…
Automated trading has several advantages over an online broker:
- To the extent that it executes a pre-defined trading strategy, automatic trading frees itself from the control of the investor’s emotions. A robot does not experience the stress, euphoria or hesitation specific to stock market activities. He also reacts faster than humans as soon as a trade signal appears when entering or exiting a position.
- Trading robots are particularly effective in monitoring many trading markets. simultaneous way 24/7. Their options are almost limitless, where a human can only effectively follow a few markets at a time…
- Automated 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 effort is 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 spending “real” money.
2/ The advantages of online brokerage: support and expertise
The creation of a Expert advisor specific to an investor is more aimed at traders experienced. Defining a stock market strategy actually requires knowing the financial markets well.Vise versaone of the online brokers’ strong points 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, phone, etc.).
- Online brokers are experts in the financial markets and are able to advise their clients on the options.
- Using a broker makes it possible to take into account market developments, which a robot does not… This flexibility reduces the risks associated with 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, it will be necessary to hire a professional.
Defining the best option between EA and online brokerage therefore depends your experience, your goals and your willingness to take risks…