It is no secret to traders that those who harness the power of advanced, automated analytical tools thrive in the market. As the number of software-as-a-service (SaaS) companies increases, more and more competitive technologies strive to produce trade ideas. The goal of these trade ideas is to minimize the trader’s human error and misjudgment. As a human, you can only “guess” the price movements of various assets perfectly so many times.
More likely than not, there will be a significant error. This might include entering and exiting at the wrong price point or failing to seize an opportunity due to external factors (news, emotions of other traders, etc.). But it doesn’t have to be this way; with advanced intelligence, you can allow computers and algorithms to do the mathematical synthesis you can’t do.
In this blog post, we will discuss why, in the upcoming decade, artificial intelligence, automation, and advanced intelligence, are essential to beat the market. Technology and AI, in general, are moving rapidly, and sometimes staying updated in these markets is difficult.
Nevertheless, you must understand how these advancements produce trade ideas. Based on historical data and statistical analysis, you can gain a competitive advantage over other traders, as your strategies and ideas will be guided by algorithms, mathematics, and quantitative analysis.
What are the benefits of advanced algorithmic trading in comparison to traditional methods?
Unlike traditional day trading, in which traders had to make trade decisions based on technical indicators, news, and short-term data, trading in the modern-day requires something different. To be a successful trader today, you need software to guide your strategy and recommend trade ideas based on historical data. One of the most significant benefits of this is that emotional trading is minimized. Think about the times when an emotional impulse or some other short-term thought (such as fear) impeded you from executing a trade.
Now, think about what would happen if you knew that a software’s algorithm was responsible for producing a trade strategy or trade idea. You would gain extra confidence knowing that the backing behind a trade opportunity stems from data and math, not emotion or impulse.
This is not to say that you cannot make trades on your own; many traders don’t use this technology. However, all traders can benefit from some level of statistical and algorithmic modeling. Even if you just get trade ideas based on entry and exit points or certain futures that you hadn’t considered before, it would be worth it.
Not only would you save time (automating many laborious processes), but you would gain extra peace of mind when executing a trade. The comfort that can result from artificial intelligence and advanced computer software cannot be understated. At the end of the day, it’s how comfortable you are with a trade that determines your success.
What are some examples of “advanced intelligence” that can help you?
One of the greatest strengths of advanced technology is synthesizing millions of data points and drawing connections between them. For example, some advanced software has algorithms that can predict the movement of a security based on the movement of another asset. If, historically speaking, APPL moved up .5 points 1 hour after certain oil security moved down 2 points (and this happened multiple times), AI could recommend an entry point to maximize Apple’s change.
Let’s say the algorithm predicts that this pattern occurs 75% of the time; you now have a better idea of how successful this trade could be. This is how artificial intelligence and advanced software modeling can benefit you. You can have trade ideas synthesized and recommended; you get to choose which ones you want to pursue and manifest.
Automated and advanced intelligence services allow traders to maximize their returns by using mathematically tested data and modeling. This is essential, as a significant amount of large financial institutions and individual traders utilize AI in some sense.
In order to beat the competition, the market and propel your trading career, researching and investing in AI software to supplement your trading routine are essential. Only through this can you truly optimize your positions in the market, make less emotional trades, and seize opportunities.