Last week we reviewed different types of algorithms you may be asked to code in as an algo developer. Today we’ll tackle the following question: Bots VS Human, who is better? We will analyze the advantages of the machine over the human.
Advantages of trading robots
Algorithms have no emotions!
This is certainly the most important point! A trading bot has no cognitive bias that is unique to humans and will therefore analyze information rationally, under any circumstances.
Have you ever felt the fear of opening a new position because the previous one closed with a loss? We’ve all made the mistake of closing a winning position too soon or letting a losing trade get even worse. Well, that doesn’t happen with a trading algorithm. Once you have optimized your parameters rigorously, it will stick to the plan and never deviate from it.
The algorithm has no distractions!
We all have days when we are more productive when we manage to be in the “zone” and other days when we are a bit more distracted. It depends of course on each one of us but we are still human beings. In trading, this can have quite serious consequences for your capital.
Again, a trading robot is exposed to the market 24/7 and has no distractions, so no opportunities are lost!
An algorithm is faster!
This is a fact, and it will be even more so with the progress of computer science. No matter how fast you are to click the buy button, you will never compete with the near-instantaneous execution of an algorithm.
Some algorithms are capable of completing thousands of transactions in less than a second, hard to beat, right?
An algorithm works without you!
This is certainly due to the representation that Hollywood has given us about the daily life of a trader: The need to stay in front of the screen all day. This is already complicated for the classic markets, but it is feasible because they have opening and closing hours.
For cryptos, it’s a different story, the market is open all the time even on weekends. Obviously, the volatility is sometimes not as high as in the middle of a US session, but as you can see, if you don’t want to miss any opportunities, sleeping is not an option.
The algorithm doesn’t need you to be present, nor does it need your computer to be on, another good point for automatic trading.
Finally, the computer tool allows you to test a strategy more quickly. If you trade manually, you have to record your trades in a spreadsheet and this takes time and a potential loss of accuracy.
On the Tradingview platform, you can test your strategy directly and see if it works at first glance.
Generally speaking, trading bots will always be more efficient than humans, but there is an exception. For someone who has already been trading for a very long time, and who has managed to control his emotions, the subjectivity inherent in humans may be necessary for success.
For everyone else, go ahead and improve your programming skills!
Do you already have a trading algorithm working, or even know someone has a good one? Do you want to earn passive income by renting it to one of the best trading communities and be sure to get what you deserve? If you answer yes to this, we invite you to contact us: [email protected]