Algo’s are never on holiday and have no emotions
They read emotions, but
they don’t get emotional
People like you and me are emotional beings. We love a laugh, a cry and a sulk.
Research has shown that some emotions are very influential when it comes to investing: We are afraid to lose as losing hurts more than winning gives joy ( This is called the Loss-aversion bias).
Most humans also resist change. They rather not do anything if it’s not completely broken (This is called the Status quo bias).
This is mostly caused by the emotion of attachment. When people own a stock they attach more positive feelings to the stock than when they don’t own the stock ( also called Endowment bias)
Algorithms don’t have those biases and they are designed to take 100% logical and high probability trades.
Algorithms can however use emotions: they can read the emotions in a Twitter stream or in articles and annual reports.