For modern traders, automated trading is a powerful tool. With no to minimum intervention, you can enter and run your traders without fussing about monitoring them for 24 hours. This advanced trading technique has different parts, and trading alerts and copy trading are two popular options for traders looking to automate their trading strategies and improve their results. In this article, we will compare these two options to determine which one is better for traders.
What are Trading Alerts?
If you do online shopping, you might have received texts about the latest offers on your favourite brands. They are somewhat like that. Trading alerts are simply notifications that are sent to traders to alert them of potential trading opportunities. These alerts are based on technical analysis, news events, or other criteria set by the trader.You can then make the decision to enter or exit a trade based on the alert.
Pros of Trading Alerts:
- Greater control over trades – With trading alerts, you get the ability to tailor their alerts to your individual goals and preferences. This means traders have greater control over the trades they make.
- Create strategies as per your preferences – Trading alerts allow traders to tailor their trading strategies to their individual goals and preferences. You can design a strategy that works best for you and align it with your goals.
Cons of Trading Alerts:
- Time-consuming and requires technical knowledge – Setting up and managing trading alerts can be time-consuming, especially if you do not have technical knowledge. Moreover, you should know how to interpret the alerts and make informed decisions based on the information provided.
- You need to make quick decisions: To take advantage of trading opportunities, you need to react quickly to the alerts. Now, this can be challenging for many traders, especially for those who are not updated with the market.
What is Copy Trading?
The agenda of copy trading is simple — copy how smart traders do their trades and implement them in your account. In other clothes, this strategy allows you to duplicate strategies of successful traders automatically. Regardless of your trading knowledge, or your experience, a copy trader can implement strategies of experienced chances and make more money with limited trading knowledge.
Pros of Copy Trading:
- It is fast: Since trades are copied into your account automatically, you can save plenty of time. And you don’t have to spend time analysing the markets and making trades manually.
- Access to experienced traders: Copy trading you to access the strategies and expertise of more experienced traders. This can help traders improve their results, especially if they are new or inexperienced.
Cons of Copy Trading:
- Reliant on the success of other traders: The biggest demerit of using copy trading is that you have to be reliant on the success of the traders being followed. So, everything works as a trade off. If the trader you are coping with is not performing well, your trades will be equally impacted.
- No guarantee of the results: When selecting traders to copy, you have to do it based on the trader’s profile and past performance. Although this is a great strategy, it doesn’t guarantee that the trader will perform the same way he/she did in the past. And the past performance is not a benchmark for the trader’s future performance. That’s so because market conditions could change and let’s not forget, even the best traders have bad trading streaks.
Both trading alerts and copy trading have their pros and cons. Trading alerts give traders greater control over their trades. However, they can be time-consuming and require technical knowledge. Copy trading, on the other hand, is easier and more effective because you are following in the footsteps of a trader who knows his/her ways in the market. However, you have to sit and let the pro sail the boat, even when the days are not bright. So, which one should you choose? The best answer is it depends on your goals, preferences, and risk tolerance. So, analyse your position and make the most of automated trading.