Introducing Automation into your Manual Trading System

January 30th, 2009

heavy load

When a lot of traders think of automated trading, they envision going from completely manual trading to completely automated trading. They mistakenly view this as a loss of control – they are used to being in complete control of their trading making every decision. It’s unsettling for a lot of people to lose this control and offload more work to their computer.

What most don’t realize is that automated trading IS complete control. The factors and inputs are completely designed and controlled by the trader and the computer doesn’t stray from the strategy it’s been assigned. This is just the opposite of lack of control.

A good way to think about switching to automated trading is to introduce automation into your manual trading system. Think of it as a continuum like in the image above. It’s not all or nothing – you can slowly integrate automation into your manual trading system so that over time you’ll do less trading grunt work and become more and more comfortable with automated trading as you move to the right on the continuum.

Here are some ways to start offloading manual work from your trading system:

  1. Use a product like Trade-Ideas to systematically gather stocks that fit your trading system.
  2. Explore using multiple monitors to save you time and effort and miss fewer trades.
  3. Use tools to automatically calculate your position size, saving time and preventing mistakes.
  4. Streamline your trading routine to cut the fat and become a more efficient trader.
  5. Use the StockTickr Trading Bot to get you into trades and then you can manually manage all aspects of the exit.
  6. Use the StockTickr Trading Bot to get you into trades with a time stop and then optionally manage an exit before the time stop expires.

There are lots of ways to become familiar with automation without going all in. Are there other ways you can think of to move towards automation on the continuum?