Pros and Cons of Automated Day Trading Software (EAs)

Rarely Is Automated FULLY Automated

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As alluded to above, successful robotic traders put in a lot of work to creating and maintaining their programs. The real work is maintaining the program. Someone can not simply flick a switch and watch the money roll in while doing nothing. This may work for a time, but ​market conditions change and unexpected events occur, which require intervention on the part of the trader.

If a person buys an EA, it is unlikely they will have the expertise to know when to intervene and when not to. Intervening, when not required, could turn a winning strategy into a losing one, just as not intervening when required could drain the trading account in a hurry.

In the Market Wizards book series by Jack Schwager, several successful automated traders are interviewed. All these traders were highly engaged with their strategies, and not just sitting back doing nothing. It is highly unlikely that a person can buy an EA and just leave it running while they sleep and work at another job. This approach may work, but only if they stay on top of the EAs performance, have the know-how to alter the program if market conditions change and know how and when to manually intervene when required.

Some people think that robotic trading takes the emotion out of trading. Unfortunately, this is not true. While the program doesn’t feel emotion, the person running the program does. People may feel tempted to intervene when they see the program losing money, but the program may still be functioning well (losing trades happen). Or they may intervene to take profits prematurely, manually overriding a trade when the person sees a profit they like. All these emotionally-driven actions could destroy an EAs profitable edge in the market.

Automated traded is rarely auto-pilot trading. It takes a lot of knowledge to be able to maintain an EA, and trading skills/psychological skills are still required to intervene when necessary, but not too much.

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