Side-by-side comparison
| Algorithmic trading software (like Charter) | Robo-advisor | Copy trading | Do it yourself | |
|---|---|---|---|---|
| What it is | Software that places trades in your account using fixed rules | A registered adviser that builds and rebalances a portfolio for you | A platform that copies another trader's trades into your account | You research and place every trade |
| Who decides the trades | The software's rules | The adviser's model | The trader you follow | You |
| Where your money is held | Your own brokerage account | A brokerage account opened through the robo-advisor, in your name | Usually an account on the copy-trading platform or its partner broker | Your own brokerage account |
| Typical style | Active, rules-based trading | Long-term, diversified, mostly index funds | Whatever style the copied trader uses | Anything you choose |
| Typical cost | Software license fee plus your brokerage's trading costs | Yearly fee as a percentage of assets | Spreads, platform fees or a share of profits, depending on the platform | Brokerage trading costs and your time |
| Personalized advice | No | Yes, within the adviser's model | No | No |
| Time required | Low after setup | Low | Low to medium | High |
| Main risk to understand | Rules can underperform in some markets, and losses can happen | Market risk; less control over individual holdings | You depend on one person's decisions and track record | Emotional decisions and lack of time |
When does algorithmic trading software make sense?
It can fit investors who want an active, rules-based strategy, want to keep their own brokerage account, and want decisions made by consistent rules instead of emotion. It is not personalized advice, and it does not suit someone who needs a hands-on financial plan.
When does a robo-advisor make sense?
A robo-advisor can fit investors who want a low-maintenance, diversified, long-term portfolio and personalized allocation based on their goals.
When does copy trading make sense?
Copy trading can appeal to people who want to follow a specific trader's approach. It's important to check the trader's full record, the platform's fees and how the platform is regulated.
When does doing it yourself make sense?
Managing your own trades fits investors who enjoy research, have time to follow the market, and want full control over every decision.
Questions to ask before choosing any option
- Who holds my money, and can anyone other than me withdraw it?
- What exactly am I paying, including fees charged by my brokerage?
- Are results from real trading, or backtested or simulated?
- Can I stop or leave at any time, and what happens to my account if I do?
- Is the provider a registered adviser, a broker or a software company?
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