Avoiding emotional decisions when trading is hard. Even experienced traders can fail. Lack of sleep, stress, low energy levels, and countless other pressures can cloud thinking, making it difficult to execute your trading strategy with a cool head.
The reality is, most aspiring traders lose money due to an inability to control their emotions; it is not easy to remain calm and calculated when the stakes are high. An effective antidote for this is to let trading algorithms handle the decisions. Algos never get tired, stressed, greedy or fearful. They execute according to defined parameters and are not affected by trade history, news headlines or other challenges that face human traders.
Algorithms predefined trading strategies that rely on predefined rules and mathematical models to execute trades, often with high speed and frequency. Imagine a robot that is programmed to follow specific instructions on when and how to trade, to maximize returns and minimize risk. An ever-reliable trading partner that follows instructions regardless of market conditions and trade history. It’s like having a Wall Street expert working for you around the clock, minus the expensive suit and the jargon!
In recent years, trading algorithms have grown in power and sophistication. Many now use artificial intelligence (AI), like machine and deep learning techniques to process vast amounts of data and dynamically adjust to market conditions. Some even using large language models (like OpenAI’s ChatGPT) to analyze financial news and social media chatter to make informed trading decisions on the fly. These have made automated trading algorithms a more viable option than every before and institutions are well-aware of this. According to Wall Street data, algorithmic trading accounts for around 60-73% of the overall US equity trading.
The algorithmic trading market is to grow from its current size of around USD 15.77 billion to an estimated USD 23.74 billion by 2028, at a CAGR of 8.53%. The rate of growth may even increase as more investors harness the power of AI to increase the efficiency of automated algo trading.
Up until now, algorithmic trading has largely been the domain of market makers and hedge funds with sufficient resources to purchase sufficient computer power to run advanced trading tools. However, as AI and algo trading tech develops, such solutions are becoming to accessible to retail investors looking to get on a level pegging with market makers. However, trailblazing retail traders looking to gain an edge of those still relying on manual strategies must proceed cuatously as all automated algorithmic trading solutions are not created equal.
We’ll have a look at the most powerful AI-driven algorithmic trading system avail to retail traders later in this article, but first lets look at some of the other advantages of harnessing the power of algos as part of your trading strategy.
These algorithms are fast, like *really fast*. They can execute trades at lightning speed, securing the best entry or exit prices in an exchange order book in a blink of an eye.
High-Frequency Trading (HFT)
HFT is like an algorithm that’s had five cups of coffee. Algos can execute multiple trades milliseconds, capitalizing on tiny price fluctuations and arbitrage opportunities that humans could not perceive or execute in time.
Trading algos can be programmed to behave based on the strategy appropriate to their intended use. From predicting market trends, to making profits from bid-ask spreads, capitalizing on arbitrage opportunities, leveraging price deviations from the mean, or engaging in news-based trading. The success of each strategy will vary according to market conditions and asset type.
Everyone loves saving money, right? Algorithmic trading is your frugal friend that helps you save by avoiding directly accessing exchanges to avoid broker fees, slicing large orders into smaller pieces to prevent price movements from working against traders, and executing orders close to the Volume-Weighted Average Price (VWAP) to reduce transaction costs.
Algorithms don’t have feelings, so there’s no room for impulsive, emotionally-driven decisions.
Each algorithm is rigorously tested on historical data before it’s unleashed, helping refine strategies and minimize potential losses. The most powerful algorithms can process vast amounts of data to continually optimize parameters to suit market conditions.
Like everything in life, algorithmic trading isn’t without risks. Technical glitches, or poor designed algorithms, can lead to significant losses. So, algos that are extensively tested, and continually optimzed to suit market conditions is essential in addition to having a robust risk management system built into your strategy. This is were many trading algorithms let retail traders down; All are not created equal! Lets have a look at the most powerful AI weaponry currently available to retail traders. Read about what AI is doing to trading.
Once solely accessible to institutional traders, sophisticated algorithmic trading tools are now being introduced to the retail market. However, traders looking to gain an edge in the market should be aware that all trading algorithms are not created equal. Some algos offer ‘one-size-fits-all’ solutions that only provide accurate trade signals under specific market conditions. When conditions change, signals become inaccurate, leading to significant losses.
Lendal Copy boasts a powerful AI-driven, fully-automated algorithmic trading system that is dynamically optimized to market conditions to ensure optimum performance. What’s more, the risk management protocol built directly into Lendal Copy protect users from significant losses if trades do not develop favorably.
Lendal Copy is a comprehensive trading solution that requires no technical analysis, manual trade execution, or complicated bot setup. Simply sign up with your brokerage or exchange API key, select from our battle-tested strategies, and then sit back and monitor your portfolio from our simple app. Lendal Copy will send buy and sell commands to your trading account while you maintain complete control of your funds. You don’t need to lift a finger!
No more staring at charts, technical analysis, or emotional trades. Our solution is so simple, you can literally trade in your sleep! Truely, a dream system for traders looking to level-up their game by harnessing the power of automated algorithmic trading.
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