Automated Trading: A Complete Guide for Beginners 2023 | TradersBest (2023)

Table of Content

  • What is automated trading and how does it work?
  • Who is automated trading suitable for?
  • Pros of automated trading
  • Cons of automated trading
  • How to choose the best automatic trading software
  • Automated trading app reviews
  • What is high-frequency trading (HFT)?
  • Final thoughts – Should you go for automated trading?
  • Automated Trading – FAQ

What is automated trading and how does it work?

Another word for automated trading is algorithmic trading, and it simply refers to the use of algorithms to automatically manage investments – from traditional stocks to cryptocurrencies. All you have to do is predetermine a trading strategy and create a set of rules like the ones you usually apply to your trades – based on this information your custom algorithm will manage your investments on your behalf. The factors that are considered in algorithmic trading include the price at which a trade is opened or closed, the timing of an investment move and of course, the value at which a financial asset is bought and sold.

An effective automated trading system will also carry out an automatic financial analysis before entering or exiting a trade. The purpose of automated trading is to simplify trading by making it more time-efficient and less emotional. You get to invest without having to constantly monitor the market and the system detects opportunities for you, so you don’t have to spend time carrying out market research.

Automated trading can be done in a number of markets, though it’s especially famous amongst forex traders. AtoZ Markets is a signal provider that offers smooth and efficient automated trading software. They’ve designed an algorithm with the help of market experts to offer a smoother and more convenient forex trading experience to its users.

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Who is automated trading suitable for?

Are you wondering whether or not automated trading is the right option for you? Here are a few types of traders who would appreciate automating their trades:

Beginners

Starting your investment journey can be extremely overwhelming for a beginner. They lack the knowledge and expertise to hunt down profitable trading opportunities and end up losing money. While many say that this is part of the process and helps you learn, you can learn trading without losing your capital as well. Automating trades allows beginners to skip the learning and practising part of investments and jump straight to earning. This is only if the automated trading system includes expert trading guidance and support, and will help you pre-set rules that are effective.

Traders who want to diversify their trades

Diversifying your trades is a great way to reduce the risk of loss while trading. When you’ve invested in several assets at once, facing loss in one of your investments can be compensated by another investment that went well. However, how do you manage so many investments at once? This is where auto trading comes to the rescue once again. With a reliable auto trading software, traders don’t need to worry about their investments constantly – the algorithmic system does that for them.

Traders who want to build a passive income

Having a passive source of income is a dream come true for many people out there; however, it demands efforts to build. Luckily, automated trading is capable of letting traders invest their money and watch it grow with the help of calculated trades. If you want to build a passive income, sign up with an automated trading system that offers relevant guidance and tools to traders.

Pros of automated trading

  • Automated trading takes the emotions of trading out of your investments and brings a more calculated trading system forward. When you’re constantly tracking the news and trading based on market trends and happenings, it’s easy to get overwhelmed and make investments based on emotions. This is more common amongst forex traders since the FX market is highly volatile and fluctuates quite often.
  • Trading manually can be a time-consuming process, and sometimes it can get overwhelming to enter, exit, and follow your investments regularly. Automated trading allows you to sit back and relax while it runs the show for you.
  • Automated trading is especially beneficial for those who want to diversify their investments with ease. Not having to manually trade each instrument allows investors to explore additional options and a range of trading strategies that are hard to apply and follow manually.
  • Traders who use automated trading get to trade 24/7. The software is always doing its jobs, even when you’re not there to track its progress.

Cons of automated trading

  • Computerized trading systems take decisions out of your hand. When the system is doing everything on your behalf, you lose the option to make discretionary choices. At the end of the day, you’re left completely dependent on a technological system rather than your own skills and expertise.
  • Automated signals or trading systems can never be 100% accurate. Sometimes the custom algorithm you’ve built could be less effective as well. So, it’s important to note that even trading robot software comes with a certain level of risk.

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How to choose the best automatic trading software

Every auto trading software out there offers unique services and features. For instance, some may offer auto trading for the forex market, whereas others may only offer auto trading for the crypto market. Here’s a list of things you should ask yourself while hunting down the best auto trading system:

Does the platform offer access to my desired market?

Make sure you choose an auto trading platform that offers services for all the markets you’re interested in. If you’re into trading forex pairs through an algorithmic system, then sign up for FXSignals.com. You can also register an account on MT4 trader.

Does the software have a simple user interface?

Make sure that the system you choose to trade through is user-friendly. The last thing you want is heavy-duty software that’s hard to understand and set up. After all, investments are a serious activity. Most auto trading software offer trial runs as well; make sure that you give each of your shortlisted systems a try before settling down on the final one.

What are the online automated trading reviews like?

Nothing speaks louder about software reliability than user declarations. Make sure you thoroughly read reviews regarding the software you’re signing up with before adding personal details and starting your investment journey.

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Are there any costs & can I afford them?

While there are free automated trading softwares, some may charge you a fee as well. Make sure you’re able and willing to pay any costs that may occur. You can compare the top auto trading software charges to ensure you’re not paying more than the market average.

Automated trading app reviews

AtoZ Markets Premium Trading Signals

If you’re looking for the best automated trading system that is reliable and highly rated for automated Forex trading, AtoZ Markets is a great option. They also offer one free signal to all their users regularly and their subscribers get access to up to 15 signals each day. You can also seek guidance from the expert forex traders available on the market. In short, the service providers offer the tools and support any forex trader needs to build an FX trading portfolio and gain potential returns on investments.

MetaTrader4

Founded in 2005, MT4 is a widely used trading platform that offers top-notch automated trading software. The platform is recognized as one of the most reliable platforms for copy trading, signal trading and automated trading services. The platform allows traders to seek expert guidance and test plus apply trading strategies that have proven to be highly effective. Their auto trading services are mainly for forex traders.

Interactive Brokers

If you’re looking for the best automated stock trading software, IB should be your go-to option. You can generate an automated, rule-based AI trading system on Interactive Brokers and benefit from their auto-traded system applicable to all instruments they offer through TWS, including automated stock trading, options trading, forex trading, futures trading and bonds trading. If you want more financial assets to automatically trade, then IB should be your go-to option.

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What is high-frequency trading (HFT)?

High-frequency trading is automated or algorithmic trading in which trades are made at a much faster face. The system buys and sells shares constantly throughout the day, allowing traders to build impressive portfolios. A few studies showed that 60 to 70% of stock trades in the US result from high-frequency trading.

If you’re interested in buying and selling shares in seconds, or even a millionth of seconds, then you might enjoy the thrillingly fast-paced nature of HFT. Even though you might be making profits in pennies per trade, it adds up to a decent amount of profit at the end of the day. Plus, HFT can be considered a low-risk way of investing as you don’t hold on to an investment long enough to lose money and you’re constantly investing in a wide range of shares.

Although, a regular automated trading system is more suitable for beginners and regular investors. HFT is more likely to suit experienced traders, so you can try it out once you’ve kickstarted your trading journey with a computerized trading system that works at an average pace.

Final thoughts – Should you go for automated trading?

Whether or not you should go for auto-trading comes down to your personal preferences when trading. Since auto trading requires little effort and makes investments a lot easier through systematically entering and exiting trades for you, it’s great for those who lack the time or want a fast way to kickstart their investment journey.

It’s important to carefully analyse each automated trading system before choosing which one to sign up with, mainly because each system offers a unique combination of financial assets and different additional services.

For instance, AtoZ Markets offers forex trading services only. So, if you’re interested in an effective auto trading software to invest in currency parts, you can sign up through their website. Similarly, the MT4 platform offers forex trading services as well. On the contrary, you can go for Interactive Brokers if you want to avail AutoTrading on more financial assets at once.

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Automated Trading – FAQ

✅ Will auto trading replace manual trading in the future?

Auto trading is a great way to minimize the efforts that manual trading demands. For instance, you don’t have to constantly monitor the market; you don’t have to follow up on your trades that often; you don’t need to worry about following market trends and technically & financially analyzing the market. However, auto trading leaves the investor without decision making power, so many investors prefer social trading instead. Social trading involves analyzing the market, then making decisions based on the trading moves of expert traders.

❓ Is auto trading forex pairs a good idea?

The forex market is highly volatile for a number of reasons. Firstly, there is a wide range of factors that may affect a currency’s price. Hence, the forex market is always fluctuating. The factors that may affect the Forex market include political intentions of financial institutions, economic factors and environmental factors. To make sure that you make the right investment moves at the right time, a forex investor has to constantly monitor the news and market trends. Visit our website to learn more about forex trading and whether auto trading forex pairs is a good idea.

💣 Is signal trading the same as automated trading?

Signal trading is trading that is done based on signals sent out by market experts. An expert trader or signal provider will share trading indications along with relevant details to followers, who will then decide whether or not to follow the signal. Signal trading is popular amongst beginners who are beginning their trading journey and experts who want to diversify their investments on larger signals. You can receive trading signals through a wide range of signal groups on Telegram. Visit our website to learn more about signal trading and how signals can be used for auto trading.

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