Modern computers are so powerful that neural networks and other software enable fast processing of huge data.
Even smartphones are capable enough to trade on the go without inconveniences. It becomes apparent that technology can be used to amplify traders' abilities to analyze big data with sophisticated tools. In this article, we will discuss how technology will enhance traders' results and how to search for the best tools.
Automated vs manual trading
In today's era, there are two ways to trade financial instruments like Forex pairs, stocks, cryptos, etc. automated trading software like Expert Advisors or other robots and manual trading. Both of them come with pros and cons, you don’t want to underestimate them.
Automated software allows traders to fully automate their trading process while manual trading traders will analyze markets with various methods, price action analysis is one of the most popular manual trading approaches in modern financial markets. We will not go into detailed methods used in price action analysis.
For details, check to learn more about price action strategies that can really assist you in trading. Let’s discuss the pros and cons of both manual and automated trading styles.
Pros of automated trading
- They enable you to fully automate your trading experience
- Less time is needed to watch the screen for trading setups
- They have no emotions and execute trading operations as programmed
- They can catch setups that need quick reaction
- Enable HFT or high-frequency trading, which is impossible for humans
- Can be run 24/5 on the cloud
Cons of Automated trading
- Need control not to trade in adverse circumstances during high volatility and other market news
- More time and money are required to buy or develop a successful trading robot. Developing or buying profitable trading robots is expensive.
- Some brokers don’t allow automated trading. This is a minor issue as there are always brokers that allow EAs.
- Ability to quickly drain account funds if there is a bug in the programming. Scalper bots and martingale systems can blow up user accounts quickly, so make sure you don't invest too much money.
- Require more extensive knowledge of computer technologies. You will need to download and install the robot and then test it before trading. This requires a bit of advanced knowledge of computer technologies, and average users could find it challenging.
Main ways technology can amplify trading results
Everyone has seen movies where traders are shouting at each other and using telephones to connect with their brokers and open trades. This is no longer the case today. Everything is done by super-powerful computers within a fraction of a second. When speaking about modern online trading, the first thing that comes to mind is indicators.
Indicators are mathematical algorithms that follow price and analyze it to show important information. They are complex algorithms, and it is impossible for a trader to manually calculate every indicator, thereby automated software is of great use here.
Most popular indicators like moving averages, MACD, RSI, etc. show important statistics about price behavior and can increase the odds of success greatly. You can find useful information about indicators and where to get them on the MetaTrader website.
Another useful thing about technology is that most trading platforms offer advanced inbuilt features to set alerts and other important reminders that make traders aware when a proper setup appears in the market. Other indicators can draw chart patterns, to make it much easier to catch the big moves.
The ability to quickly check and see world news as they happen is another advantage of modern technology. So, how can we use technology to our advantage?
Best approaches to using technology in trading
Using technologies to maximize a trading strategy's win rate and profitability is crucial.
Make sure you use everything modern computers can offer. Use online charting platforms that offer alerts, and an extensive indicators base. Platforms like TradingView will elevate your ability to analyze markets to the next level.
Not to miss something important, always try to be aware of important news and other macroeconomic data. Many platforms offer an inbuilt news panel to see when something important happens. This can help traders define when markets are extremely volatile, reducing market exposure.
Try not to overuse indicators and robots, and learn to trade yourself to master important skills and become disciplined. Sometimes technologies can make people overconfident and therefore lose money. So healthy balance is advised.
Summary
There are ways technology can amplify trading results for traders. From using indicators and alerts to fully automating the trading processes, modern computers offer huge advantages.
Modern charting and trading platforms like Tradingview will show all important news, indicators, and alerts in one space, making it much easier to catch proper setups.
But technologies have their disadvantages too, relying too much on them can negatively affect trading habits and skills. It would be best to both know trading yourself and use technology for best results.
