Stock trading is a great way to reach financial gains in today’s society. What’s even better is there are several methods one can use in order to become a successful investor. Even with limited capital, you can begin investing in stocks by watching the markets and attempting to hit something big. In this article, you’ll learn about different approaches you can utilize in the stock trading markets.
There are two main different strategies to stock trading
The two strategies you’ll come across in the stock trading profession is automated trading and manual trading. Both have their advantages and disadvantages, and different investors will choose one over the other. It’s important to learn the difference between these two methods so that you can figure out which one is best for you. Whether you are using the swing trading or day trading methods, it’s imperative to know how to get around the markets to make your gains.
Automated trading has been growing in popularity in recent years
Automated traders are exactly what it sounds like: software robots that keep track of the markets for investors and traders. These automated trading systems make it so traders can create specific rules for trade entries and exits. Unless the bots are malfunctioning, they will always execute programmed commands correctly. These systems make the life of trading a lot easier and roughly 75% of U.S. stock exchanges are done using them.
There are some disadvantages to these systems, however. Because it is technology, there is always the chance that it can malfunction in one way or another. You need to be careful about buying cheap software, otherwise, you get what you paid for: a cheap automated system. A cheap and poorly made system will not work as well as one that was made properly. Other disadvantages include having to constantly monitor the computers for any technical errors and avoiding over-optimization.
Old school manual trading is still an option many prefer
Manual trading is what it’s called when an actual person is behind the markets and doing all the hard work. Unlike the automated trading system, the human manual traders actually have a brain and can use their sense of emotions to help with a stock trade. Whereas a bot has to execute all of its decisions based on what’s been programmed into it, a human trader looks at the whole picture in order to process everything and piece it together.
As fantastic as the manual trader sounds, there are some disadvantages to using human rather than a robot. It’s much slower as a bot can just automatically do what it’s programmed to and a human has to process before taking action. Furthermore, a human will eventually get tired and need to take a rest, whereas a robot will be able to keep going without any breaks.
In conclusion, personal preference is the deciding factor
You can choose to have an automated trading system with the bot that does all your trades for you, or you can choose the human manual trader. It’s all dependent on if you care to have all details in the near and far future monitored, or if you are fine with just the immediate scenarios, as the robot can only study so many details.