5 mistakes to avoid when starting automated trading
Mistake 1: Investing more than you can afford to lose
This is the golden rule. Trading, even algorithmic, involves risks. Never invest money you need to live on. Start small, with the minimum, and increase gradually when you're comfortable.
Mistake 2: Panicking at the first drawdown month
A drawdown (temporary decline) is normal, even for the best algorithms. Sentinel for example can have negative months. What matters is the trend over several months. Don't cut your algorithm after one bad month.
Mistake 3: Changing strategy too often
The worst enemy of performance is impatience. If you change algorithms every month, you never benefit from compound interest. Choose a strategy that suits you and stick with it.
Mistake 4: Not diversifying
Putting all your capital on a single algorithm increases risk. Ideally, spread across 2 or 3 different strategies to smooth out volatility.
Mistake 5: Ignoring compound interest
Withdrawing gains each month means missing out on the magic of compound interest. Let your capital work and you'll be surprised by the results at 6 or 12 months.