The lowdown on robo-investment

There is a lot of hype about robo-investing; that is to say, handing control of your savings over to a robo-advisor, who will then invest it on your behalf. On the surface, it does sound a little crazy. Why would you relinquish control of your cash in the first place, and why to a robo-machine? We intend to get behind the hype and give you the low-down, the pros and cons of robo-investing.

Robo-investing doesn’t have anything to do with robots of course. It’s just a fancy name to grab your imagination. What it really is, is a set of specially created algorithms that financial advisors use to suggest what stocks and shares etc. would make for a good investment portfolio.

It’s all in the algorithms

If you’re an internal-savvy person, you will have no doubt heard about algorithms in conjunction with Google. They use them to police online activity and grade websites. Robo investors use similar algorithms, but created for the express purpose of spotting good investment opportunities.

Robo-advisors first appeared on the scene back in 2008. Yes, that’s right – the year of the global financial meltdown. They were originally algorithms that were conceived in order to realign invested assets in target-date funds, to allow investors to have a new, online platform.

Before 2008, this type of software, or set of algorithms, was only available to financial advisors who used it to manage their investments. During 2008 however, these robo-algorithms became available for use directly by the individual investor through robo-advisors.

Today, it is businesses the likes of Black Diamond, Envestnet, and Orion, who make this software specifically for IFAs. Each IFA has its own specific concoction of algorithms.

The cons of using a traditional robo-advisor

A traditional robo-advisor is one which only offers a robo interface to its clients. Everything is fully automated, and there are plenty of reasons why many people are nervous about trusting in this sort of investment.

  • Your investment portfolio, once created cannot be changed
  • There is absolutely no human interface
  • After your application is complete, you have no influence on anything
  • You are no more than another name on a traditional robo-advisors client list

The whole concept of working with a traditional robo-advisor comes from the angle that you do not want any contact with your advisor and that you don’t want to get involved in any way with the performance of your investment. If this is you, then a traditional robo-advisor works fine.[Continue Reading…]

Some common misconceptions among the new traders

People are amazing in nature. Once they decide that they will do something it’s really hard to change their decision. Similarly, when it comes to trading this very human nature causes huge loss to the traders. Some even consider trading as one of the most dangerous profession since the success rate is too low. According to the researchers, only 5 percent of the traders are making money. So by seeing the data, you should understand that how competitive the trading world is for the new trader. However, once you develop a solid trading strategy and gain enough experience you can easily make a huge amount of money. But most of the retail traders fail to train themselves in the perfect way due to some common misconceptions. Today we will focus on the most popular misconception prevailing among the rookie traders.

forex trading

Trading more is the only way to earn more

The new traders in the financial industry often think that the more they will trade the better chance they have to make money. In the United Kingdom, the professional traders completely disagree with such a conception prevailing among the novice traders. In their point of view, the only way to make a huge amount of money is by trading less. According to them, the full-time currency traders should only focus on high-quality trade execution and they should do their technical analysis in the higher time frame. When you trade in the larger time frame then you can easily get a clear overview of the market. Most importantly if you use the smaller time frame then you will have to deal with lots of false spike and trading signals. If you are not experienced enough then this false spike even blow your entire trading account. So focus on quality trade setup and trade with discipline. Overtrading is not a bad thing only rather it is one of the most deadly mistakes in the investment world.[Continue Reading…]

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