There are multiple ways to look at trading in the financial markets. Automated trading, which uses trading robots to manage positions taken automatically, is an approach that is gaining momentum among institutional and retail investors. But can this investment method also be beneficial to retail traders?

What is a Trading Robot

A trading robot is a set of precise trading and money management rules transformed into an automated trading system, which allows computers to execute and monitor stock market transactions autonomously.

We are talking about automatic trading, trading software, and trading algorithms. Once the computer program has been set up and introduced to the market, the forex trading robot automatically searches for trading opportunities according to the traders’ established rules. It manages from A to Z the position, monitoring, and closing without any user intervention.

Why use Automated Trading?

One of the main benefits of auto trading is that it can reduce the emotional nuisance factor, as trades are automatically placed as soon as specific criteria are met. By controlling their emotions, traders easily stick to the plan.

Moreover, since the trading rules are established in advance, and the execution of trades is carried out automatically, the discipline that the trader must exercise is completely preserved even in unstable markets.

Trader psychology and lack of discipline are among the most significant contributors to the losses of many individual traders on the stock market. Automated trading helps reduce these risks but does not entirely eliminate them.

In trading courses, we often read things like having a trading plan and following it no matter what, but it’s not always easy to do. The trading robot allows traders to maintain consistency in following the established trading plan.

Algorithmic Trading Software Has Practical Benefits.

1. They are Faster

Apart from the psychological factors, which are very important, trading software also has practical advantages. One of them is the reaction rate. Since computers react immediately to changing conditions, automated systems can generate trading orders as soon as trade criteria are met, saving some valuable extra pips.

2. They Perform Multiple Tasks Simultaneously

Another area where the machine will surpass the human is the ability to monitor multiple markets simultaneously. It will multiply trading opportunities and spread risk across various instruments and trading systems. The trader can even diversify by establishing different strategies at the same time. This approach, which is almost impossible for a human to accomplish, at least on a certain level, is effectively executed by a trading robot.

3. They allow Simulations

Finally, as the trading strategy is completely programmed and set, you can test it on historical data in minutes. The novice trader can thus get a glimpse of how the system would have reacted under real market conditions in the past. He can make adjustments if necessary before letting him generate trades in real time. Of course, past performance does not bode well for the future performance that the robot will generate, but it provides a good basis for work.

For the best performance in your trading, picking legitimate and reliable software is ultimately important. Before venturing into automated trading, read software reviews such as BitiCodes review and check if the software meets your expectations. Also, trading forums are great places where you can read various opinions of experienced traders about trading software features and many more.