Automated Trading vs Traditional Trading


Automated Trading vs Traditional Trading images

The financial trading world is constantly evolving, with new methods being developed to achieve profits and reduce risks.

Traditional trading:

Traders make decisions based on data analysis and available information, relying on factors such as technical and fundamental analysis, as well as psychological factors like expectations and past experiences. Traders depend on their personal skills and deep understanding of the market to make sound decisions regarding buying and selling.

Automated trading:

Computers and software are programmed to make trading decisions based on predefined rules and criteria. Automated trading strategies rely on digital data and information, enabling quick and highly accurate decision-making.

What distinguishes automated trading from traditional trading?

  • Speed and efficiency: Automated trading executes trades rapidly based on predefined criteria, reducing the possibility of delays.

  • Decision accuracy: Thanks to algorithms and software used in automated trading, decisions can be executed with high precision and data analysis for optimal decision-making.

  • Overcoming psychological factors: Automated trading reduces the influence of psychological factors such as fear and greed that may affect traditional trading decisions, increasing the stability of the trading strategy.

  • Diversity and variety: Automated trading allows for trading across a variety of markets and assets, increasing opportunities for diversification in investment portfolios.

  • Cost reduction: Automated trading can reduce costs resulting from instant execution and automated market analysis, contributing to achieving higher profitability.

One realistic statistic about automated trading is the proportion of trading volume executed through algorithmic trading systems compared to traditional manual trading. According to some reports in major financial markets, algorithmic trades represent more than 60% of the total trading volume. This statistic highlights the significant impact of automated trading in modern financial markets.

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