Why should we do our own automated trading?

Many people often ask me several questions about why we should even bother doing our own automated trading.

Why not let the professionals do it?

There's really nothing wrong with letting your money sit in a managed fund. However, let me pose the same questions and frame them differently:

  1. Why do some people file their own taxes annually to the ATO? Why not give it to the accountant?

  2. Why do gym-goers create their own exercise plans and go to the gym? Why not get a trainer to create your exercise plan and guide you through the process?

  3. Why do some investors choose to buy/sell & manage their own rental properties? Why not let a real estate agent do it?

  4. (Put your own example here)

I suppose you can see where I am going with this.

Is it worth it?

Many people who choose to self-manage their own super, go to the gym, do their own taxes are genuinely interested in these activities and probably enjoy them. After all, noone has your best interests for your your health, tax, finances, investments, etc. than yourself. The key question here is not whether it is 'worth it', but whether you are interested in it enough to make it 'worth it'.

Can we beat professional managers?

Most professional managers struggle to even beat the market. And the superstars that are highlighted in the news are either for that short moment in time, or those that do it consistently over time are basically individuals who make up 5 out of the 7.6 billion people in the world. So you have roughly a \(1.3\times10^{-10}\) of doing so.

I believe that it is definitely possible to beat the term deposit rates that are offered are your local banking institution. Furthermore, much of the performance outcomes that are quoted by managed funds usually have not factored in the expenses. Thus, when you're a beginner, for the first 1-3 years, focus on just beating the term deposit interest rate at your bank. Beyond the 3-year mark, you should gave gained enough knowledge if the market inefficiencies, your own trading psychology to obtain similar results to the market index.

After all that time spent on learning the markets, coding, and trading, is it worth it?

It's worth it because you like investing, programming, and trading as an intellectual exercise. Otherwise, you're better using your leisure time to go to the gym, hiking or spending time with your family. Just like anything else in life, you need to spend much of your waking hours building up the skillsets to succeed. You don't do it because of the outcome, but regardless of the outcome.


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