The present and future of financial assets trading is no doubt automation. In a fast and dynamic market, automated trading software helps investors to make objective trading decisions at all times. There is no danger of emotions or other human vulnerabilities, such as exhaustion, interfering with objective market analysis. This means that investors get to apply trading strategies at their optimal performance levels, for maximum profitability and minimal risk, round the clock. In every way, automated trading is the way to go for investors that want to widen their profitability scope.
What is Automated Trading Software?
Automated trading software are trading systems that making trading decisions, such as entries and exits, mechanically in the market based on coded algorithms. Automated trading basically involves following a trading strategy without human intervention. A trading strategy is essentially a set of rules that guide how an investor will take advantage of the lucrative opportunities in the market in a manner that enhances profitability but limits risks. Any trading strategy can be coded into algorithms and then automated. Strategy automation helps investors to trade with speed and efficiency so as to achieve maximum profitability with as minimal risk exposure as possible.
Modern-day automated trading software are able to leverage various FinTech technologies to boost consistency and effectiveness of any trading strategy. But while the bulk of trading activity in global financial markets is now controlled by automated trading software, the concept of rule-based trading is not a new one. As early as 1949, top hedge funds started setting rules on how to buy and sell the funds. The concept grew in popularity and by the 1980s, retail investors started implementing rule-based trading strategies on their portfolios. The tech revolution of the late 1990s saw the development of advanced automated trading software that could leverage on the power of the internet.
After the turn of the century, trading software was now available in the retail market, for purchase or even self-development. As technology has continued to advance, the capabilities of automated trading have also expanded to allow investors to take maximum advantage of the opportunities available in the market.
The Pros and Cons of Automated Trading
|Eliminating emotions||Over Optimisation|
|Speed and Accuracy||Technological failures|
|Diversification||Not Ideal for some Strategies|
|Backtesting||No intuition when trading|
The Pros of Automated Trading
- Eliminating Emotions:
When trading orders are executed mechanically, there is no danger of emotions interfering with the objective application of profitable trading strategies. Automated trading completely eliminates emotions when trading the volatile financial markets, ensuring that investors are able to reap the maximum reward of a trading strategy applied at its best.
- Speed and Accuracy:
Computers function faster and more accurately than any human mind can manage. Trading software can scan and track multiple markets and execute orders quickly and accurately as soon as set conditions are met.
Automated trading software allows investors to stick to the cardinal rule of investing: Plan your trade, Trade your plan! The volatile financial markets test human discipline to the limits, but automated trading ensures that consistency of action is achieved at all times.
Automated trading enables investors to implement multiple trading strategies across multiple markets at the same time. When using trading software, investors can diversify their portfolios to expand their profitability score without necessarily increasing their risk exposure.
Automated trading has made it easy to perform backtesting on any strategy so as to determine its effectiveness, or lack thereof. Due to the amount of historical data involved, backtesting is a very time-consuming activity. But automated trading software makes it possible to perform quick backtesting so that investor can tweak or optimise a strategy if necessary.
Automated trading allows investors to free their time. Trading software does not require human intervention after the required trading parameters have been set. Investors can utilise the freed time to enhance their lifestyles or even further develop other trading strategies.
The Cons of Automated Trading
- Over Optimisation:
After a series of backtests, investors may be tempted to tweak their strategies so as to achieve even better results. This brings forth the danger of optimising an otherwise working and profitable trading strategy. The goal for automated trading is not to achieve 100% working strategies, but to deliver profitable ones. The relentless search for a ‘holy grail’ may, in the end, lead to strategies that cannot function practically in a live trading environment.
- Technological Failures:
Beyond their utility, trading software are still computer programs that are vulnerable to technological failures, such as crashes and server downtimes. There may also be communication problems between the software and an underlying broker’s platform that may result in a strategy being misapplied. This is why some trading software utilise VPS services to guarantee the best execution of orders at all times.
Automated trading software are programmed to trade the markets based on set parameters. While this has its advantages, it also means that trading software can sometimes be inflexible to sudden market events, such as high impact data releases or even major political announcements that can trigger big price changes.
- Not Ideal for some Strategies:
Automated trading software are very efficient, but their intelligence is still artificial. They are essentially programmed to work logically, and not necessarily intelligently. This means that logical strategies are best suited for automation, but other strategies cannot be as efficient when traded with trading software.
- No Intuition:
Humans are intuitive beings, and, in some instances, the mystical gut feeling can help investors make some positive trading decisions in the market. Investors who have occasionally relied on this can find automated trading unattractive.
How to Choose an Automated Trading Software
There are numerous automated strategies available in the market, but not all of them can help investors realise their trading goals and ambitions.
Here is what to consider when selecting trading software:
By definition, latency is basically the time delay between a request and a response. When utilizing automated trading software, there is communication between the robot and the underlying broker’s server for order execution. In the volatile financial markets, even a marginal delay in order execution can be the difference between a profitable trade position and a losing one. It is therefore vital to choose low latency trading software; or, alternatively, an automated trading software with VPS functionality to enable and guarantee best execution at all times.
One of the major concerns about trading software is that they completely remove investors of the trading decision loop. While the efficiency may be worth it, it is always important to trade with software that allows for a high degree of customization options. The functionality to customize trading parameters, such as stake amount, trading times, tradable assets and other risk management orders, can help investors to stay in control of their trading activity and overall profitability.
Trading software can come in different forms: downloadable software or web-based interfaces. To achieve efficient automated trading, it is vital to select software that is most convenient for you to access anytime you wish to do so. For this reason, most investors prefer web-based automated trading software because they require no installation, no maintenance and no updates whatsoever. They also allow for convenient accessibility through both desktop and mobile browsers.
Backtesting involves testing a trading strategy based on historical data. It involves simulation on how an automated trading software would have performed in the past. Backtesting helps investors to qualify a trading strategy or at least perform some tweaks so as to optimise it. Good automated trading software must allow for backtesting as well as the accessibility of historical data.
It is important to ascertain that your broker’s platform supports the optimal performance of your desired trading software. The automated trading software must have seamless connectivity with the broker’s platform so as to execute orders in real-time as soon as the set criteria are met. It should also be easy to start trading with the software on the underlying trading platform. Features, such as an auto trade button, are especially important because they allow the investor to quickly switch the automated trading software on/off.
Automated trading is basically making a manual trading strategy operate mechanically. Some of the strategies applied by automated trading software include mean reversion, trend following, fundamental analysis and chart pattern recognition. It is important to understand the underlying strategy that your desired trading software is applying in the market. Most trading software will provide documentation on the logic its algorithms implement when trading financial assets online. It is prudent to select trading software that applies strategies that are in tandem with your desired investing goals and ambitions.
Granted, a profitable trading software is beyond price, but still, nothing is worth an infinite price. In any case, you are acquiring trading software money and the initial cost must not dent your eventual trading capital. It is therefore vital to pick out automated trading software that is priced fairly because in the investing world, literally, every dime matters.
Top Automated Trading Software
Based on the criterion above as well as our own independent experiences and that of other users, we have compiled a list of the best, automated trading software available in the market now. Learn more below:
Bitcoin Trader is an automated trading software designed to allow all types of investors to profit from the lucrative cryptocurrency market. Using Bitcoin Trader, investors can trade the price fluctuations of Bitcoin and other top cryptocurrencies. The trading software is web-based, which allows for flexible and convenient trading via both mobile and desktop browsers. The software utilities both technical and fundamental strategies to identify the best opportunities to exploit in the market. Bitcoin Trader also allows investors to customize trading parameters such as tradable coins and tokens, stake amounts, trading times and automation levels. The trading software also has VPS functionality to guarantee the best execution of orders at all times, as well as the revolutionary Time Leap feature that ensures Bitcoin Trader is always 0.01 seconds ahead of the retail financial markets.
Amazingly, the software is available for free to any investor. Check out the full review of Bitcoin Trader here.
Bitcoin Evolution is an exclusive community of early crypto enthusiasts and investors who made big money out of the crypto market. As cryptocurrency prices plateaued, the investors sought to develop a day trading software that would take advantage of the volatility in the crypto market to guarantee investors consistent profits every day. The software is web-based and it implements a strategy that seeks arbitrage opportunities in the crypto market round the clock. Bitcoin Evolution has partnered with top global brokerage firms whose trading platforms support the optimal performance of the trading software. Investors can trade with the automated trading software for free if they sign up with any of their recommended brokers and gain full access to their exclusive community. In addition to cryptocurrencies, Bitcoin Revolution users can also trade other asset classes such as Forex, Stocks, Indices and Commodities.
Learn more on how the Bitcoin Evolution works and how to be part of their exclusive community here.
Cryptohopper is a web-based platform that allows investors to utilise an automated trading software to profit out of the price changes in the cryptocurrency market. The trading software has a user-friendly, intuitive interface and is packed with numerous, handy features that can help investors of all levels trade their favourite coins and tokens for maximum profits with as minimal risk as possible. The features include Strategy Designer, Mirror Trading, Automatic Trading, Backtesting, Trailing Stops and Hedging. Cryptohopper also has a marketplace where investors can view and buy the best performing strategies to apply to their portfolios. It is important to note that Cryptohopper is a paid service with payment plans that range between $19 and $99 per month. However, there is a free 7-day trial as well as Paperless Trading functionality for investors who would wish to test it out without risking real money.
Click here to learn how you can hop with the Cryptohopper.
Crypto Cash is an award-winning automated trading software that offers all types of investors the unique opportunity to earn daily profits of at least $1000. The trading software is available for free, but investors can start trading with it after making an initial capital of at least $250. Crypto Cash utilises advanced HFT (high-frequency trading) strategies and leverages on top technologies to identify and take maximum advantage of the best intraday trading opportunities in the crypto market. Crypto Cash has also partnered with some of the best brokerage firms offering world-class trading services to investors. All Crypto Cash investors can also open demo accounts where they can verify the performance of the trading software with virtual funds before letting it run on real trading accounts for real profits. It is quick and easy to get started at Crypto Cash and the customer service team is also excellent.
Click here to learn more on the Crypto Cash.
Immediate Edge is a crypto trading software that is fully automated. The trading software has recorded a near-perfect success rate of over 98% for its trading signals. This is why most Immediate Edge users have managed to earn profits of at least $1500 daily. The software is compatible with most of the major crypto exchanges such as Coinbase, Poloniex and Kraken. It can also be utilised on the platforms of select top global brokers recommended by the Immediate Edge community. Immediate Edge has also ensured that investors can use multiple safe and convenient payment methods to deposit and withdraw from their trading accounts. There is a free and unlimited demo trading app available to all Immediate Edge investors, who can use it to develop or tweak various trading strategies risk-free. Immediate Edge also allows investors to apply various customisation options that will further enhance their profitability or limit risks in the market.
Click here to learn about the Immediate Edge.
MetaTrader 4 is one of the most popular trading platforms used by retail investors to trade Forex and other financial assets online. The platform supports automated trading through the MQL4 IDE (Integrated Development Environment) where trading robots and custom indicators can be developed. Developers can publish their work on the free CodeBase or sell it in the MetaTrader 4 market. The MetaTrader 4 market has over 1700 trading software that investors can buy, rent, or in some cases even acquire for free. All trading robots available have been verified to work smoothly on the platform. There is also a Trading Signals service that supports real-time copy trading.
Click here to learn all about MetaTrader 4
MetaTrader 5 is the latest iteration of the MetaTrader platform that allows investors to speculate on CFDs of practically any types of financial assets. Automated trading on the platform has been enhanced as well and developers have even more tools and resources available. The MQL5 market features the biggest collection of trading robots, indicators, scripts, libraries and other trading applications, which are all accessible to MT5 users. There is also the Meta Editor feature that allows the creation, editing, compiling and debugging of MQL5 source code. MetaTrader 5 has also made it easy and efficient to perform Strategy Testing and Optimization, which has no doubt expanded the capabilities of automated trading on the platform.
Click here to learn all about MetaTrader 5
Developing Your Own Trading Software
There are numerous trading strategies that traders can learn or even buy so as to implement on the market when trading their favorite financial markets online. But if you ever want to be a genuinely great trader, you will have to put in the work to develop your own trading strategy. To achieve efficient automated trading, it is important to develop logical strategies because trading software are programmed to follow rigid sets of rules. Some of the strategies to consider that trading software can consistently apply include: Technical analysis (interpreting mathematical indicators); News Trading (taking advantage of economic news releases); Statistical analysis (taking advantage of asset correlations); and Arbitrage opportunities. It is important to choose a strategy that is consistent with your risk profile as well as your trading capital and investment goals. This will mean deciding on the assets to trade, the time frames, stake amounts, stop loss level and exit points. After settling on your strategy, the next step will be to validate it. This will be done through backtesting and forward testing, which will help you understand the best conditions that support the optimal performance of your strategy. You can then proceed to perform necessary tweaks or optimization before applying it on a live account.
The Pros of Developing your Trading Software
- Trading Personality. Every trader has a unique personality and developing your own trading software ensures that you create a strategy that will enhance your strengths while at the same time mask your vulnerabilities. This will no doubt be a strategy that is designed to work for YOU.
- Strategy Review. When you develop your own automated trading software, it is easy to perform an efficient review of your trading strategies. You will know exactly what which parameters to alter or tweak when the trading software is not performing well in any given market conditions.
- Continuous Development. A trading strategy that works has to be customized to match your trading personality and character traits. This is a process that never ends, and true trading mastery can only be achieved when you do it yourself.
- Trading Goals. You are the only one that knows your true investing goals and ambitions, and this can guide you to develop trading software that will help you achieve them as effectively as possible.
The Cons of Developing your Trading Software
- Time Consuming. Developing trading software is obviously a time-consuming endeavor even for experienced traders. From strategy development and risk management to strategy validation and aligning it your trading goals, there are many considerations that will require sufficient time to ensure a profitable trading system is developed.
- Complicated. While there are some platforms that allow even non-tech savvy individuals to develop trading software with ease, the process remains challenging and you may not eventually create the type of trading software that you had initially envisaged.
- No Guarantee for Success. Even after developing your own trading software, there is no guarantee that it will deliver consistent profits when you eventually run it on your live trading account. No matter the results of backtesting or forward testing, financial markets remain an uncertain environment where past or present success does not guarantee future performance.
Hire a Software Developer
When you consider automated trading, there is also the option to hire a software developer to code your strategy. For most investors, this is the easier and most convenient way. It is also time-saving. But there are numerous challenges. To start with, it is incredibly difficult to find the right software developer for your specific project; a good developer who does not understand trading will not create the right product for you, while a good developer who understands trading might be too expensive to consider. Furthermore, software development is not a once-off project, and you may require on-going support and maintenance which will continue to drive your overall costs higher. When working with a software developer, you will also be required to divulge the full details of your strategy; at the very least this may compromise your proprietary rights and at worst the developer may not capture all the intricate details that give your strategy its competitive edge.
Automated trading has been a great innovation in investing. Trading strategies are now applied at their optimal best, with investors able to achieve incredible consistency, efficient portfolio diversification and also eliminate inhibiting emotions out of their trading activity. The main danger for automated trading software comes when markets experience whipsaw or sudden choppy moments. This is why going forward AI integration will be vital in unlocking the full capabilities of automated trading. Trading software of the future will be able to leverage Big Data to give structure to the vast amounts of unstructured global live data feeds and make intelligent decisions in performance improvement and predictive maintenance. The future is no doubt in the algorithm, and in investing, this means less risk and more profits.
Dov is a Blockchain and Forex trading enthusiast, who spends most of his time trading and examining software who are related to cryptocurrencies and forex trading. You can follow on Dov’s reviews and articles here on CoinRevolution and across the web.