Emotionless trading is a huge component of being a successful trader, as it is a means of ensuring that the trader is operating with a healthy and logical mindset. By doing this, risk management and smarter trades are optimized, therefore the trader is protected from huge losses, or losing all of their profits.
I have been day trading for two years now, and I find it extremely difficult to trade without emotion. Once I am locked in a trade, I tend to wait until I see green before I exit. Despite this working in some cases, I usually find myself incurring a bigger loss than I had anticipated.
Is there a possible solution to emotionless trading? Yes there is, and it involves taking human out of the equation.
Algorithmic trading is nothing new and has been around since the 80s. This style of trading relies strictly on the software to enter and exit trades. This software can be very unique, as it can be tweaked to the desire of the programmer or trader. As long as the software has parameters and threshold values to operate with, it has the ability to run without the presence of an individual.
The beauty of this is that the parameters and different values that make the software operational are completely decided by the individual. For instance, if a trader relies on a certain pattern to make a trade, then the algorithm can be tendered to look for that pattern specifically. On the other hand, if a trader does not look at patterns and is simply trading using support and resistance, the algorithm can be tweaked to take only this method in consideration. I believe that a strong algorithm is a combination of many different technicalities, as well as the intuition of an experienced trader.
I have a great interest in designing an algorithm that satisfies my personal guidelines and parameters. For the past two years I have read a lot of books, articles, and videos pertaining to day trading. I have also been involved in live trading myself, first with Questrade and then with Interactive Brokers platforms.
Penny stocks in particular are what caught my interest. These are stock that are under $10 a share, and although risky, can have significant potential profits. As my interest and skills continue to develop in the field of coding and stock trading, I plan to design a software that will trade penny stocks without my presence being necessary. I will set up my own parameters and stop losses and simply let the program run. I plan to check how the program performed at stock market close, and carry out necessary adjustments and tweaks along the way.
As the weeks and months go by, my ultimate goal is to perfect the program to an extent where it can give me profits similar to a side/part time job. Join me on this journey, and updates will be posted to my Github page and this blog.
Thanks for the read!
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