Many investors subscribe to newsletters to get recommendations on which stocks to buy and sell. These newsletters typically send out alerts on a schedule, and this works well for some investors. For those who can’t be there at the precise moment of arrival, however, such emails can represent lost opportunity. This leaves people who missed out wishing that they knew how to invest automatically.
Introducing Auto Trading
Some investment companies have come up with the perfect solution to this quandary. An investor can set up an auto trading account and subscribe to their newsletter of choice, while a broker executes the trades that are recommended in the material. This ensures that none of the recommendations are missed even if the investor isn’t available right when the newsletters alerts are sent.
How Does It Work?
How auto trading systems work is simple. Typically, there will be a few steps that need to be taken to get everything set up. First, the investor will need to sign up for an investment newsletter and set it up so that a copy of the trading alerts are forwarded to the brokerage. Then, it’s time to choose the maximum amount per trade. This can be based on dollar amount, percentage of account value, or number of contracts.
At reputable brokerage firms, the investor can change parameters at any time. This makes it easy to keep up with evolving finances, portfolio sizes, and other key factors.
Are There Any Pitfalls to Watch Out For?
There are risks associated with any kind of trading, but the auto variety brings in a few of its own. One is a result of the use of a newsletter as a guide to trades. If the newsletter’s advice is wrong, money will be lost.
If the investor doesn’t agree with the newsletter’s advice, it’s likely that trades will be made anyway. While it might be technically possible to apply the brakes on a trade at any time, most people who use an auto trading service choose it specifically because they don’t want to babysit the action.
Extra fees can apply to trades made through a brokerage’s auto trading desk. While these are usually reasonable, it’s important to factor them into calculations for potential profits.
How to Use Auto Trading Successfully
While there is no way to guarantee success with any trading strategy, there are ways to increase the chances of favorable results. The first area of focus should be the choice of investment newsletter. That’s because the newsletter is the foundation of this type of auto trading. If its advice is wrong, success will elude the investor.
The next area of attention is the parameters that are set for trading. By controlling the amount of trading that can take place, investors also control their levels of risk exposure.
Due diligence is also required when choosing which broker to use as an auto trading partner. Choose a company with a good reputation for stability, honesty, and competence. Trading stocks and options may be inherently risky, but the brokerage firm doesn’t have to be.
Regal does not advise, consult or assist any advisor with respect to the content, recommendations or strategies contained in any advisor or trade alert published by any advisor.
Options involve risk and are not suitable for all investors. Prior to trading options, you must be approved for options trading and read the Characteristics and Risks of Standardized Options. A copy may also be requested via email at firstname.lastname@example.org or via mail to Regal, 950 Milwaukee Ave., Ste. 102, Glenview, IL 60025. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.