Automated trading strategies are designed to execute trades based on predefined rules without human intervention. They rely on historical data, mathematical models, and technical indicators to make decisions, rather than emotions.
While automation can provide consistent execution and reduce emotional bias, it’s important to understand how they function over the long term and what limitations they have.
1. Focus on Long-Term Performance, Not Daily Fluctuations
A well-designed strategy is built to perform over weeks, months, or even years. Daily ups and downs are normal, and obsessively checking results every few hours can lead to unnecessary stress.
📌 What to expect:
✅ Some days will be profitable, others won’t—this is part of the process.
✅ Short-term losses are expected, but over time, a good strategy should outperform random trading.
✅ Strategies work in cycles—they might underperform in certain market conditions but excel in others.
🔴 When should you intervene?
- If a major market crash (e.g., 2008 financial crisis, COVID-19 crash) happens.
- If the strategy consistently underperforms over a long period (months, not days).
- If technical issues occur, such as API errors or exchange problems.
2. Automated Strategies Do NOT React to News Events
Unlike human traders, automated strategies do not watch the news, Twitter, or breaking events. They execute trades based on pre-set conditions, meaning they won’t react to sudden market-moving news like:
❌ Exchange hacks (e.g., FTX collapse, Bybit NK Hack).
❌ Regulatory crackdowns (e.g., SEC lawsuits against crypto platforms).
❌ Black swan events (e.g., COVID-19 crash, geopolitical conflicts).
❌ Unexpected liquidity issues (e.g., a major fund liquidating assets).
📌 What does this mean for you?
- If a black swan event occurs, you may need to manually pause or adjust the strategy.
- If a hacked exchange causes a token to crash, the strategy won’t know—it will just follow its logic.
- Some traders set alerts for major news events so they can decide whether to intervene.
3. Market Conditions Change – Strategies Must Adapt
No strategy works perfectly forever. Markets evolve, and a strategy that performs well in a bull market may struggle in a bear market or sideways conditions.
📌 How to manage this:
✅ Monitor performance over weeks/months, not daily.
✅ Diversify strategies—some for trending markets, some for ranging markets.
✅ Adjust risk settings if market conditions shift drastically.
4. Psychological Discipline Is Key
Many traders panic and turn off automated strategies after a few losing trades, only to miss out on the big wins that follow.
📌 Mindset for success:
- Trust the strategy’s long-term edge instead of reacting emotionally.
- Avoid manual interference unless there’s a valid reason (e.g., exchange failure).
- Accept that drawdowns happen—even professional hedge funds experience them.
4. Final disclaimer
Just like stated in the Terms & Conditions of Quantapes.com, you are solely responsible for monitoring and managing your trading activities. While automated strategies help execute trades efficiently, they do not guarantee profits or protect against unforeseen market events. It is your responsibility to assess risks, adjust settings when necessary, and intervene in extreme situations. Quantapes provides the tools, but how you use them is entirely up to you. 🚀
Final Thoughts
✅ Automated strategies remove emotional bias and execute based on logic.
✅ They don’t react to news events, so traders should be aware of major risks.
✅ Short-term losses are normal—focus on long-term performance instead.
✅ Adapt strategies over time as market conditions evolve.
If you treat automated trading as a long-term game and avoid obsessing over daily results, you’ll be in a much better position to let the strategy work as intended. 🚀