Automated trading is something that has been sought after by almost all investors in the stock market for decades now. However, there are many confusions or misunderstandings about what is really being sought and to what extent things can be automated.
Some investors in their early days are called by some kind of advertising that claims to be the solution with which the only work that needs to be done to generate profits is to press a couple of buttons and wait for some software to do the rest for us.
Unfortunately, in investing there is no such solution. Sooner or later most people end up realizing this.
When they finally understand that investments require study, analysis, and work, most of them give up because they understand that investments are simply not for them and decide to go in search of the next magic solution available.
On the other hand, some investors decide to continue the search for automation to invest in the simplest possible way and without using too much time.
This page will summarize and clarify the level of automation and ease that can actually be achieved in investments. Because it is true that you can run a business in the exchange market automatically, it is impossible to automate absolutely everything.
Table of Contents
Making Intelligent Decisions Automatically
Technology is here to help us, and with increasing advances, it is possible to rely on it for increasingly complicated tasks. In the 90s, we encountered the IBM Deep Blue Machine.
This device was able to play year after year a very close chess game against the then world champion Kasparov to being able to control things inside our home with our phone or mobile device.
Nowadays, we have state-of-the-art software like an OKX trading bot, that helps us to invest automatically – and that, throughout the entire year.
The most interesting aspect of a modern trading bot is that they focus on the current crypto market, thus making it easy to buy and sell BTC, ETH, or any other crypto coin.
But is it possible to Entrust Our Investments to Software?
The answer to this question depends on who answers it. Skeptical investors will say a resounding no, while those who are a little more open to trusting and really want to save themselves work and effort will probably say yes.
From our perspective, the key point is not whether we can trust software with everything or nothing but knowing what we can trust and letting the technology do its part while we do ours.
That is simply the most balanced scenario and the one that has proven to be successful in stock market investments to date.
The Psychological Element in Trading Bots
Anyone who has kept a transaction open and has been given the task of monitoring it every day will agree to say that it is one of the most stressful tasks that exist, as it is about seeing our real money, up and down.
This causes many strong emotions because that money is the fruit of our work, and we can’t afford to lose it and we are very concerned about losing it.
These emotional ups and downs, 99% of the time end up betraying the investors and finally influencing the decision they make about when to close or open the transactions.
That’s because, by the time they are ready to close the transaction, their reason (unconsciously) is nothing more than the amount accumulated or lost.
Therefore, it is not a decision based on the analysis we initially made, which precisely led us to decide to open the transaction.
Changing from manual to automatic can help us to maintain a discipline that no human being is able to have, because the software does not have any kind of emotions. A trading bot is not influenced in any way to see prices go up or down or to accumulate profits or cut losses.
And that is an advantage that every investor should know how to use.
The Importance of Remaining ‘Cool’
Human beings believe that we are always in control of ourselves, it is something that is in our nature. However, when strong emotions attack us, we simply react.
For example, in a car accident, we’ll be scared. On top of that, we won’t be able to prevent that emotion from affecting us and affect us to make the right decisions about what we should do in that case.
The same thing happens when emotions attack us during our investments. We simply end up reacting to what happens in the market, thus losing the battle and we end up making bad decisions and giving away our money through losing trades.
Ironically, that is the whole point of how the market is structured and designed, which is why there are far more winners than losers.
Even after everything we just said, there is good news. Brokers are putting more and more technological tools at our disposal in each of their software which we have access to for free just by opening an account with them.
To these tools we can indicate an action plan to follow, the closing price of a transaction with profit, the closing price with loss, and any other type of possible scenario which we can think of.
These instructions to follow can be set up before the trade is opened before everything happens, and before we have any kind of emotion that can influence us to make bad decisions.
These tools are the buy and sell orders, and they are known by everyone because no one can invest in the stock market without sending a buy or sell order.
However, only a very small percentage knows how to make the most of all the types of orders that exist and how they can be used to automate this important part of the stock market business in a disciplined way.