Why is AI changing the way people trade on the financial markets?
Perhaps you’ve heard of trading robots so often in the past months that you feel there is something you may be missing. There is a lot happening right now within the trading sector, and trading bots play a main role in it. There are industries that have utilised bot tech. For example, the customer service sector uses chatbots to aid clients with their queries and problems. Other areas include cryptocurrency, which has also moved towards the implementation of bots. But why have traders started to look for bots to help them navigate the global financial markets? Are there any benefits to this? Let’s take a look at how automated trading has become a popular phenomenon in 2021.
The Advantages of the Trading Robots
In trading, there are primarily forex robots or computer software, that carry out a range of automated trading functions. The most common functions include sending notifications to traders when they should take a specific position that aligns with their trading strategy, or even directly placing trades on their behalf. It is possible to program a trading bot to operate around the clock on a set of predetermined trading signals based on the constant monitoring and analysis of data in the specific market.
Plan Your Trades and Trade Like a Machine
We are limited with the time we have. In this modern era, we are constantly on the go, with little time to dedicate to monitor the financial markets constantly. Even if we do our best, there could be a chance we miss high probability trading opportunities. This is where robots come in — they require no maintenance or breaks, aside from periodically adjusting the instructions you would like them to follow. You can still plan your trading strategy, but you can enter the financial markets with confidence knowing that you can automate your trades and execute your strategy how you want.
Bots Don’t Catch Feelings
A lot of traders end up making losses when they trade with emotion. A lot of trading decisions you see new traders make are based on bias, greed, gut feelings or even anger. As a result, this can lead to undesirable consequences, that’s why using bots when trading eliminates the emotions involved. These scanning programs that work on the basis of complex algorithms can make decisions in an instant without falling into the trap of last-moment considerations. In fact, it is precisely due to this that they are often considered to be more efficient. Once you have input the parameters under which you want the bot to trade or simply monitor a market, you waste little to no time placing your trades.
Efficiency at its best
Watching several currency pairs while effectively working on entries, exits and stop-loss orders, amongst other things, is hardly achievable by a single human being. Multi-tasking is easier for a program than it is for us, and the conditions set can determine how effective a sophisticated trading strategy is in a short amount of time. Following the same line of thought, when using a trading robot, backtesting becomes much easier.
Manually going through all of that historical data and using it to optimise a strategy can be complex, time-consuming, and draining. Robots can crunch all of those numbers and historical data rapidly, allowing for the testing of strategies at a much faster pace than usual. Due to this, it is also much more feasible to get started with forex trading by utilising automated trading systems instead of otherwise.
All the aforementioned points align together to form optimal conditions for traders in a world where the markets are more volatile than ever. During the coronavirus pandemic, markets plummeted and started recovering at a steady pace in the second half of last year. Now, in 2021, there is the prospect for newfound growth, where our societal and operational structures have been altered vastly by restrictions and health safety measurements. On a worldwide level, the trade volume itself is expected to see a climb of 8% during this year, and the world GDP at market exchange rates should also see an increase of 5.1% as compared to the decrease of 3.8% during last year.
How to Get Into Robo-trading
A growing concern has prevented many from giving trading bots a try — namely, scams. It is crucial to research the market before you trade, so you are aware of all the possible trading risks. If you already have a trusted broker, then a safer option may be looking into what automated trading programs they have. Eightcap recently started offering capitalise.ai — a tool for automated trading. With it, traders can make informed strategic decisions based on aggregated data sources. The best part of the deal is the fact that the tool comes completely free of charge with an Eightcap account.
Trading robots continue to grow in popularity and the ongoing global situation only gives more reasons for these automations to go under the radar for many who see the risk but not the possibility. While it is our personal responsibility to make informed decisions, it is also important to be open to opportunities that allow us to move forward, and trading bots seem to be one of the tools that can help us do that.
Trading on margin is high risk.
