As anyone who has tried their luck at trading and burned their fingers knows, trading stock markets is all about human psychology and timing.

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Human/Discretionary Trading:

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• In this case human psychology can work against you in things like trading, like when you are having a bad day, trading when you are under the weather, feelings of being upset when you face a loss and there is a natural human tendency to want to make up for it (commonly known as revenge trading), feeling like a moving stop loss is better or eyeballing the stop loss and all of a sudden the price changes very quickly before you can act, when you have a few positive days or a winning streak overconfidence leading to taking higher risks.

• Human emotions usually run high when it comes to money, and having a level headed approach can be a huge challenge. 

• Lets talk about speed and efficiency. When humans are trading there is only so much one can do, human speed is never faster than a computer. Processing that all rules have been met and then taking action takes a few seconds at the very least.

• Another challenge is trading across many different instruments, when one is trading generally two to three instruments can be monitored by the human eye and traded efficiently.

• Scalability becomes another challenge in discretionary trading as one can only deploy a limited amount of funds and keep track of it.

• Discretionary trading is highly time consuming as it requires one to sit in front of the system constantly to monitor markets and trade. It can be one of the most stressful professions out there leading to severe burn out.

 

When we use a computer to execute orders based on a pre-coded system, there are many advantages:

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• Human emotions are completely out of the picture so there is just no question of revenge trading, missing stop losses, etc. Rules are set up and no matter what, every single time, the rules are followed.

• The speed and efficiency at which a computer processes and executes orders in milliseconds.We optimize our systems for high processing speed and we are able to send out multiple orders every millisecond across many instruments. A computer has the ability to send out multiple orders per second across an unlimited number of instruments so a very large amount of capital can be deployed while tracking a distributing it efficiently across multiple strategies and instruments.

• Consistency works well in our favor. The computer will follow through Every. single. time. no exceptions.

• The best part of Algo trading is it doest require much human involvement so it frees us up to do a lot of research. Instead of sitting in anticipation and watching stock market movements all day we get to do what we like best. You could say we are a research company, that’s how much of research we do, we are obsessed with data and calculating all kinds of market based metrics.