Confirmed by science reason why algorithms earn more
If a person and a trading robot use the SAME strategy โ the robot almost always earns more.
And this is not an opinion, but a fact confirmed by research, funds, and exchanges.
Let's analyze why exactly, with numbers ๐
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๐ FACT #1: EMOTIONS REDUCE YIELD BY TENS OF PERCENT
๐ฌ Study by Barber & Odean (University of California)
One of the most cited studies in financial science:
โข Analyzed 66,000 traders
โข Period: several years of active trading
โข Conclusion:
Active traders earned on average 6โ8% less per year than the market
because of:
โข fear
โข greed
โข premature exits
โข averaging against the trend
๐ The strategy was profitable โ execution was not.
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๐ FACT #2: A PERSON BREAKS EVEN A PROFITABLE STRATEGY
๐ฌ Study by Vanguard & DALBAR (Investor Behavior Report)
DALBAR compares annually:
โข market yield
โข yield of investors
๐ Average data over 20 years:
Indicator
Yield
Market (S&P 500)
~9โ10%
Real investors
~3โ4%
โ Minus 50โ60% potential profit
โ The reason is emotional decisions
They buy in hype
They sell in a panic
They miss the best movements
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๐ค FACT #3: THE ALGORITHM DOES NOT CHANGE THE RULES
Now the most important.
When the same strategy:
โข same entries
โข same stop losses
โข same take profits
๐ PERSON:
โข "I'll hold longer"
โข "I'll close earlier"
โข "It's scary, the market is strange"
โข "What if it reverses"
๐ ROBOT:
โข Executes code
โข Always
โข Without exceptions
โข 1000 times in a row
๐ Result:
the algorithm implements the mathematical expectation of the strategy,
a person โ no.
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๐ FACT #4: HFT and funds HAVE LONG UNDERSTOOD EVERYTHING
๐ฌ CME, NASDAQ, JP Morgan data
โข 70โ80% of trading volume on major exchanges โ algorithms
โข In hedge funds:
โข Man Group
โข Renaissance Technologies
โข Two Sigma
โ A person does not make trading decisions in the moment
The algorithm is faster
The algorithm is more accurate
The algorithm does not get tired
The algorithm is not afraid
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๐ง IT'S NOT ABOUT THE STRATEGY โ IT'S ABOUT EXECUTION
Hereโs the key thought that most ignore:
90% of traders are looking for the "perfect strategy"
10% understand that the problem is in psychology
๐ Even a simple strategy:
โข RR 1:2
โข 45% winrate
โ WITH MANUAL TRADING:
โก๏ธ turns into a loss
โ IN AUTOMATIC:
โก๏ธ consistently earns
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โ ๏ธ WHY PEOPLE CAN'T TRADE LIKE A ROBOT
Because of:
โข the brain reacts to loss more strongly than to profit
โข fear activates ancient survival zones
โข trading โ logic, trading = pressure
๐ Even experienced traders:
โข they miss trades
โข they violate risk
โข they change plans based on emotions
โธป
๐ THE FUTURE OF TRADING โ HYBRID
๐ก The most effective model today:
A person creates a strategy โ the robot executes it
โข person โ analysis, context, idea
โข robot โ entry, exit, risk, discipline
๐ This is how professionals work, not "button pushers".
โธป
๐ฅ RESULT (SAVE FOR YOURSELF)
โข ๐ Emotions cut profit by 50%+
โข ๐ค The algorithm implements the expected value
โข ๐ Research confirms the gap
โข ๐ง The problem is not in the market, but in psychology
โข ๐ Automation = the next level of trading