Robo-traders are a new innovation in the investment marketplace that are already having a significant impact on the trading environment among short sellers, mutual funds, private investors and hedge funds. While the technology still faces some scepticism, the results of robo-advisors and robo-traders, coupled with the qualities of this AI-based solution, means that robot trading is definitely here to stay.
And one of the primary reasons for this is that robot traders don’t suffer from that perennial issue for human investors…emotion! No matter how experienced you may be as an investor, when the market turns against you it’s almost impossible to eliminate emotional reactions, which can lead to some poor investing decisions.
Robo-traders eliminate this issue by being cold, calculating and objective at all times, meaning that they deliver the best possible responses even in crisis situations.
Trade while you sleep
As Gordon Gekko once memorably proclaimed in the movie Wall Street…money never sleeps! Unfortunately, this represents an inbuilt disadvantage of human beings, as we do sleep! This is where robot traders come in, with robo-traders having the inherent ability to trade 24/7, 365 days per year; truly a quality that will revolutionise investing.
Compatibility with cryptos
Cryptocurrency has made major headlines all over the world since Bitcoin experienced its astronomical increase in value, and it is now clear that cryptos are here to stay. What this means is that cryptocurrencies will become an increasing fixture in worldwide markets.
Thankfully, robotic traders are well-placed to deal with post-cyrpto reality, as there is a wide range of bots available that particularly specialise in cryptocurrency trading. So even if you don’t know your Ripple from your Litecoin, there’s no need to be left behind.
Robotic traders are able to identify and execute opportunities much faster than is possible for even the most instinctive and quick-witted human trader. Allowing technology to make trades, rather than entering orders manually, can be of critical importance in the incredibly fast-moving markets.
Trading systems based around AI are also able to monitor multiple markets simultaneously, which is practically impossible for any human trader. This multitasking capability certainly provides robo-traders with an important edge over their human counterparts, and can be used to great effect in partnership with human intellect and intuition.
Backtesting is a great way to test the validity of any trading strategy before implementing it in the real-world. Backtesting involves applying trading rules to historical market data, in order to create a model of trading behaviour that closely mirrors real-world conditions.
Careful backtesting with AI traders makes it possible to assiduously determine how your trades might work out in actual market conditions, giving you a head start, without requiring you to risk any of your money.
Accessible for everyone
Historically, it hasn’t necessarily been easy for the average man and woman in the street to understand trading, meaning that many people are effectively frozen out of the markets. But robo-trading has really democratised the market by ensuring that everyone can gain access to trading in a relatively straightforward fashion. This will only advance the popularity of trading in the years to come.
AI delivers continual improvement
Possibly the biggest advantage of robotic trading is that AI never stops learning and improving. This has been seen in such fields as chess, where AI has improved in leaps and bounds in a matter of months. Trading is more complex than a board game, with more random and less-defined boundaries, but robo-traders will definitely get better and better at understanding it, and thus will deliver ever improving results.