Have you ever thought you missed a good trade because you were asleep, at work, or just going about your day? I understand how you feel. Looking at charts for hours and feeling the FOMO (Fear Of Missing Out) set in but what if you could hire a robot to do all of your trades all the time, and it wouldn’t have any feelings? A helper, an automated trading.
This ultimate guide will show you exactly how these systems work, the best automated trading platforms available today, and how to get started, even if you’re a complete beginner. Let’s get started.
Getting to Know Automated Trading Systems
What does it mean to trade without thinking?
Automated trading is when computer programs and algorithms buy and sell things on the stock market without any human help. There are rules and instructions for these automated trading systems that tell them when to buy and sell.
Imagine it as a difficult recipe:
- The Recipe (The Strategy): This is your plan for how to trade.”Buy 10 shares of Apple if its 50-day moving average goes above its 200-day average” is one example.
- The Chef (The Algorithm): This is the code that runs everything. It always checks the market data to see if the conditions in your recipe are right.
- The Action (The Execution): As soon as the conditions are met, the algorithm sends the trade order to your broker faster than you can blink.
What happened? A methodical and disciplined approach to trading that removes emotions, which is the biggest enemy of consistent trading.
Different Kinds of Programs, Bots, and Automated Trading Software
Automated trading systems are not all the same. There are many different shapes and sizes of them to meet different needs and skill levels.
- Retail Automated Trading Bots and Apps: These are simple automated trading programs that brokers and other businesses often give away. They are great for people who want to automate things but don’t know how to write code. Some examples are simple bots that trade on crypto exchanges or apps that buy and sell stocks on their own.
- Custom-Coded Algorithms: This means that professional and quantitative traders write their own algorithms in languages like Python, MQL4/5, or Pine Script. You have a lot of freedom with this, but you need to know a lot about technology.
- Social and copy trading platforms: These are a type of partial automation, even though they aren’t fully automated. You can automatically copy the trades of people who are making money. This became popular because of sites like eToro and ZuluTrade.
- API-Based Solutions: A lot of automated trading platforms have APIs (Application Programming Interfaces) that let you connect your own software directly to their trading engine so you can trade.
The Best Apps and Sites for Trading Automatically
It’s very important to pick the right platform. Here is a list of some of the best automated trading services that work in many markets.
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MetaTrader 4 and 5 (MT4 and MT5) are for Trading Stocks and Currencies
Everyone in the business does this. It has a huge library of Expert Advisors (EAs) and custom indicators, which makes it a great place to make automated trading systems. It is an automated trading platform that millions of people use.
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You Can Use CryptoHopper, Pionex, or 3Commas for Crypto
These platforms have a lot of pre-made automated trading bots that can help with strategies like grid trading and DCA (dollar-cost averaging). In the world of cryptocurrencies, they are the best tools for automated trading.
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Two Companies That Work Together are TradeStation and Interactive Brokers.
These brokers have automated trading software that is very powerful and works like a pro. They are great for people who want to trade in many markets and have everything they need in one place.
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IG Automated Trading for Beginners
IG has a great mix of its ProRealTime coding platform and a set of simple, ready-made strategies. If you want to know, “What is automated trading that I can easily start with?” This is a good option.
Automated Stock Trading: Questions and Answers
You don’t have to call a broker to buy stocks anymore. These days, anyone can trade stocks without having to do anything.
You can trust an automated stock trading platform to help you come up with strategies.
- Some technical indicators are RSI, MACD, and Bollinger Bands.
- Basic facts like earnings reports and P/E ratios
- Looking at feelings and news
You can keep track of a complicated portfolio with both simple automated stock trading apps and more advanced automated stock trading software suites. The most important thing is to find a solution that fits with how you like to invest.
What is software that makes day trading easier?
Day trading is hard and moves quickly. This is where automated day trading software really shines.
These systems can:
- Scan hundreds of stocks or pairs at the same time.
- Make trades in milliseconds to take advantage of price changes that don’t last long.
- You can easily handle a lot of different positions and levels of risk.
When you day trade, speed and dependability are very important. People like to use low-latency VPS hosting platforms like MetaTrader or dedicated platforms like NinjaTrader for these high-frequency automated trading systems.
How to Start Safe Automated Trading for Beginners
If you’ve never been there before, the world of algorithms can be scary. This is my simple guide to automated trading for people who are new to it.
- First, learn how to trade; then, make it automatic. Before you let a bot trade your money, you need to know how it works. Don’t trade it if you can’t explain it.
- Start with a demo account. You can trade on paper or in demo mode on all good platforms. Use it! For at least a month, use your automated trading program in real market conditions without putting any of your own money at risk.
- Over-optimizing, which is also called curve fitting, is the worst thing you can do. It’s when you change your algorithm so much that it works well on old data but not at all on new data. Make sure your plans are clear and easy to follow.
- Start Small: Only use a little bit of money that you can afford to lose when you go live. Imagine it as the cost of your schooling.”Fully automated” doesn’t mean you can just set it and forget it.
- You need to keep an eye on it all the time. You should check the system’s performance on a regular basis to make sure it is working right.
Automated Trading Strategies and Those That are Only Partially Automated
It’s not always “all or nothing.”
- The system takes care of everything, from scanning to trading to managing risk. This is what fully automated trading is. A lot of people want to do this, but it needs a system that works well and has been tested many times.
- Partially Automated (or Semi-Automated): This is a great place to be in the middle. You still have to agree to the trade, but the automated trading tools do most of the work, like finding trade setups and telling you about them. This keeps you up to date and saves you a lot of time in front of the screen.
If you’re new to automated trading, the safest and most educational way to start is with a partially automated approach.
How to Compare Trading Platforms and Services
How do you choose one from so many? This is your list:
Be very careful of companies that say they can help you make money. Don’t just look at a few months of hand-picked data; look for long-term performance data that you can check.
Be aware of all the costs, such as spreads, profit splits, and subscription fees. A “free” bot might find other, less obvious ways to get money from you.
- Safety: Automated trading platforms need to be very safe, especially when it comes to cryptocurrencies. Check to see if the platform has had security problems in the past and if it offers two-factor authentication (2FA).
- Backtesting: A good platform will let you use data from the past to test your strategy. This is the first step you can take to protect yourself from a bad strategy.
- Community and Support: It’s great to have a lot of other users and a support team that responds quickly when you have problems.
Things to Keep in Mind and Do
We’ve talked about a lot of stuff. Let’s bring it back home.
Trading doesn’t make money out of nothing. If you use this tool the right way, it can help you trade better, with more discipline, and on a bigger scale.
You have to do this:
What do you want? Do you invest passively or actively trade stocks every day? The type of automated trading software you need will depend on what you want to do.
- Learn: Take some time to learn the basics of trading strategies and how to manage risk. Your knowledge is your most valuable asset.
- Choose a reliable platform: You should start with one of the automated trading platforms I mentioned. Create a demo account and give it a shot.
- Test, Test, Test: Use the demo account to try out a simple plan from the past and one that you want to use in the future. Be patient.
- Be careful when you go live. Start with a small amount of money, keep an eye on things, and never put in more than you can afford to lose.
- Automated trading systems are a fascinating area with a lot of potential. If you use this technology with an open mind and a lot of care, you can become a smarter and more organized trader.
Please talk to me now. What is the one thing about trading automatically that you still don’t understand? Please let me know in the comments below.