IndependentInvestor Discusses The Use of Black-Box Strategy

Online spread betting resource Independentinvestor.co.uk reviews the recent partnership between TD Waterhouse and Saxo Bank and LCG and its implications for their traders.

Online PR News – 07-July-2011 – – One of the biggest financial spread betting mistakes is letting emotions take control. Both new and seasoned investors are often guilty of breaking this rule, they feel that if they hold out a bit longer, they make more, or the movement will take a sudden burst in their favor. The simple facts are these gut feelings very rarely will end in the investors favor, and almost always ends badly. For this reason, a spokesman from IndependentInvestor.co.uk mentions that utilising what is known as the Black Box Strategy has many benefits.

Often known as the “Black-box trading system, is an already designed and back-tested strategy whereby the investor has no control, or knowledge of the formula in which it is using,” explains Frank Paul the spokesperson. He continues, “There are many advantages to this strategy, however, there are also numerous downfalls.”

The main draw to this method of trading is that it allows the investor to leave behind their emotions, as the type of system makes uses of algorithms as well as other indicators. The main disadvantage traders have mentioned is the lack of control they feel when leaving their investing up to a system of this nature.

“The more experienced financial spread betting traders have often balked at this type of system, as they have no idea of knowing what the actual indicators of the underlying assets will trigger signals,” noted Paul. He also made note, that most seasoned investors will follow their own strategies, and will not use these algorithmic trading systems.”

Someone whom is new to financial spread betting may find that using a trading system that has been back tested and developed by a third party is more for them, whilst they learn the finer details of trading in this derivative, and learn to put their emotions away and not allow it to influence their decisions.

Paul ended with, “It is ultimately up to the trader if they wish to use a black box or algorithmic trading system, and they have to have the self assurance and self control to know when to leave their emotions behind.” “Whilst the black box system of trading can be profitable, an investor must fully understand that this is not a straightforward solution to a profitable portfolio.”

About: IndependentInvestor.co.uk is a leading provider of investment education for private investors in the UK. Comparing hundreds of financial spread betting, share dealing and contract for difference brokers and accounts. Also providing a comprehensive and easy to understand investment guides, giving retail investors a better understanding of financial markets and investment options in the United Kingdom.

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Contact Information
Paul Frasier
Independent Investor
413 Bromyard House
London London, w3 7BY

0798 881 9825