Automatic trading is a solution that allows you to save time, optimize your trading strategies, and trade faster and at any time without monitoring the markets and placing orders yourself.
Automated trading also makes it possible to significantly reduce the influence of emotions in trading decisions and to follow one’s trading plan or strategy precisely and continuously since it is software or a trading robot that does the work at the trader’s place.
However, before embarking on this trading activity, discover in this guide everything you need to know about automatic trading and the best brokers/robots/software with which to do automated trading.
What is automatic trading?
Automatic trading is a trading technique that partially or totally automates entry into and exit from positions on the financial markets.
With automatic trading, all buying and selling operations are carried out by a program. However, the trader needs to define the parameters of his trading strategy after careful technical analysis.
What is Automated Trading Software?
Trading software or algorithm is a computer program allowing orders to be given automatically based on the various signals of financial market trends.
This trading tool, also called a trading robot, makes it possible to carry out transactions instead of the trader. Trading software relies on technical analysis of the market to make decisions.
How to Do Automated Trading?
Choosing a Platform for Automated Trading
Define the parameters of your trading strategy (take profit, stop loss, etc.)
Set up a set of rules and conditions to be followed by the algorithm
Launch the custom algorithm and let it analyze the market and place trades for you
What are the Types of Automatic Trading?
Automated trading: the trading software has total autonomy over the trader’s investment. It is up to him to decide whether to open and close positions, calculate the risk/reward ratio, define the size of positions, etc.
The trader is completely inactive once he has set up the program.
Assisted or semi-automatic trading: once the trading robot has analyzed the markets according to the parameters indicated by the trader, it alerts the trader, who can then place an order or not.
Assisted trading or semi-automatic trading can also consist of the trading software simply managing the positions opened by the trader.
What Assets Can You Auto Trade?
- Currencies (minor, major or exotic)
- The stocks
- Raw materials
There are also trading bots focused only on one kind of asset. So depending on the asset you want to trade with, choose the software accordingly. In the choosing process, compare several platforms to find the one that perfectly matches your expectations. In that aim, we recommend reading reviews since they are excellent sources of info, such as Biticodes review, for example.
Who can do Automated Trading?
Automated trading is suitable for novice and intermediate and professional traders. Since trading software does not require any special knowledge, even beginners can use it. Professionals most often use it to test their strategy. Independent traders and even financial institutions that own trading robots can also do automatic trading.