Trading like CFD Trading or Forex Trading has become very common nowadays and there are many traders relying on trading to generate their main or passive income. Generally, there are two main types of traders – Manual Traders and Algorithmic Traders (also called Quant Traders).
Manual Traders as its name, place a trade and close the trade manually by analyzing the market technically and sometimes fundamentally while Quant Traders use an automated trading bot to trade on market to gain automated passive income. In our honest opinion, we do not have strong preferences for either way as long as it works. When we say it works, it means the same process or action of trading can consistently generate profit in long term.
However, it is undeniable that an Automated Trading Bot or Algorithmic trading has some key advantages that you should at least considering to include as part of your trading strategy.
Monitor the market 24 hours
The key challenge for manual traders is you will have to monitor the market to wait for a potential trade setup. You could be waiting for a whole day without a trade setup.
To make matters worst, no one will be able to monitor the market for 24 hours. A lot of CFDs such as Forex trade 24 hours a day and 5 days a week. There are some other markets like crypto that trade 24 hours a day and 7 days a week. We have to accept the fact that there are limitations that what a human can monitor on the market compared with a computer or machine. Let’s them do what they are strong at – an automated trading bot can monitor the market 24 hours per day and can monitor up to each second changes for looking for certain patterns or trade setups.
Emotionless
Human is an emotional species. It took a long time for an experienced trader to be trained to be less emotional in trading. Especially for new traders, it is really hard for them to see their hard-earned money changing in value with every tick and not get emotional.
When is the last time you close a trade that you shouldn’t? If you are using an automated trading bot to trade, you have solved the major part of this emotional problem. The automated trading bot can trade according to the strategy without any emotion. It won’t solve 100% of the emotional issue as eventually, you are still the one that controls the automated trading bot or Expert Advisors (EA), but at least you won’t be the one doing the manual trade and have to decide every step. The automated trading bot will do most of the stuff for you regardless of your emotional state.
Indeed, along the way, running the automated trading bot will slowly train up the control of your emotion.
Strategy
How do you know that a trading strategy is working or can consistently profit? This is one of the key challenges for manual trading. As no traders can trade for 24 hours and they can only trade for a certain period ( which is a subset of 24 hours), and based on these subsets, after a period of time trading this strategy, then they conclude that this trading strategy has a win rate of xx %.
This way of concluding can easily form a survivorship bias, which is a type of sample selection bias that occurs when an individual mistakes a visible successful subgroup for the entire group.
While comparing with trading using an Automated trading bot, you will be able to backtest the trading strategy with historical data. In this case, all trading patterns or setups that meet your trading strategy criteria will be traded and will form part of a more complete result or win rate over a period. This method will give you a more complete view scientifically and give you a higher chance to generate automated passive income.
Conclusion
To conclude, an Automated trading bot or Algorithmic trading clearly can give traders a few key advantages that will increase their success rate to generate an automated passive income.
If you are new to forex trading or you are passionate to get a new automated passive income, you should consider the Automated Trading Bot and join our Apprentice program. In this program, we will teach you how to deploy our Automated Trading Bot to earn automated passive income for you.
