The Online Investing AI Blog

We’re pretty impressed with Automated Trading. As a concept, it makes sense, especially for the busy, self-directed investor.

• You have the return power of active trading.
• You don’t have the greed and fear of active traders (if programmed correctly).
• You don’t have the fees and other payment hijinx of mutual funds.
• And you don’t have all the time spent researching the market and waiting to make trades.

So, throw all your money into Automated Trading. Forget about the index funds and long-term investments.

I’m not sure that’s the best idea.

No matter what stage we are in the Wealth Singularity, it’s important to manage your risk. This is at the granular level–managing the risk at each level.

And also at the macro level. You should still use best practices to array your portfolio. This means keeping the 401 (k) and IRA. Making sure you have an emergency fund. Having a few conservative long-term, dividend-producing stocks.

Automated Trading, like any man-made thing, is just a tool. We believe it’s a tool that has a lot of potential. A lot. But it’s still a tool that should be added to your box of investment tools.

Just because someone invented the electric screwdriver, did everyone chuck their old reliable models into the trash? Not at all. There are some jobs where the plain screwdriver works great.
And that’s how you should approach any new trading technology.

Use. But don’t abuse.

Related posts:

1. Automated Trading Compared to Mutual Funds
2. Five Ways To Optimize Automated Trading Systems
3. Automated Trading and the Value Investing
4. Automatic Income Potential From Automated Trading
5. Automated Trading and the Internet

Related posts brought to you by Yet Another Related Posts Plugin.