Stručni savjetnik

Algorithmic Trading

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Some traders wish for the perfect robot that will do all the hard work for them. Of course, this is not possible, but automating your trading to a certain extent is quite feasible. EA trading will help you with this.

What is algorithmic trading?

Trading on financial platforms is not always done manually. Experienced traders often use algorithms, which are created using code and special software. These mechanisms help to open and close trades according to previously established rules; for example, according to the price movement points in the underlying market.

Why use algorithmic trading?

When the basic parameters are met, the program can execute a sell or buy order on behalf of the trader. This eliminates the need for the trader to monitor the market for the purpose of implementing their strategy. By using algorithmic trading, a trader can engage in long-term investing, opening and tracking positions even when there is no time. So trading becomes less stressful and more comfortable – unlike a trader, the program can operate 24/7.

Expert Advisor (EA)

What is an EA?

An Expert Advisor is a special program that works by following the traders' instructions in the trading terminal without their involvement. Since all tasks are performed in the terminal automatically, the program is called a Mechanical Trading System (MTS) or an Expert Advisor.

How does an Expert Advisor work, and how useful is it?

The working scheme is very simple: the trader adds an EA to a trading terminal connected to a broker's server, and sets up the EA. The robot starts trading automatically by the strategy preset by the trader.

Expert Advisors make traders more comfortable psychologically when trading on financial markets. They do not have to make decisions every minute, and do not need to do in-depth technical and fundamental analysis: all necessary calculations are already included in the program.

Where to use an EA?

With the development of EAs, algo stock and forex trading has gained popularity among users. Algorithmic trading of bitcoins on crypto exchanges has also become quite popular.

An Expert Advisor (EA) can be efficient and useful in several aspects of trading at once. Firstly, it helps to quickly test any trading idea. Testing them manually to obtain an objective result would take much more time, while iterating over the robot parameters allows you to save test reports and see what this or the other particular algorithmic trading strategy is capable of. This approach will be relevant for scalping, when large volumes of transactions must take place on a small timeframe. An EA may also prevent the trader from incurring massive financial losses.

How to create an Expert Advisor

Expert Advisors for MetaTrader 4, which is the most popular platform, are written in MQL4. This programming language has been developed specifically for working with automated systems. Programmers who are familiar with this language will be able to create a Forex advisor easily, while ordinary users may have to spend more time and effort creating theirs.

RoboMarkets offers an excellent solution for such cases – a free trading robots constructor that requires no programming skills. Creating your trading robot is simple with the Constructor. This is available in R StocksTrader, a multi-asset algo trading platform with advanced tools for technical analysis and more than 11,700 trading instruments.

How to test Expert Advisors

Before using an EA in real market conditions, traders can backtest it in the terminal. This testing is very useful because it helps traders evaluate the efficiency of the Advisor they have created, troubleshoot possible errors, and estimate approximate profits and losses. Usually, there is a dedicated window in the terminal for this purpose, where users can also optimise the input parameters of their Advisors and thereby increase their performance.

Parting words for beginners

In the beginning of the trading journey, traders who have little experience with algo trading platforms may find operations involving trading robots rather difficult. However, after several months of automated forex trading, they are usually able to create their own EAs. If you are hesitating about trusting your money to a computer program, you can configure your Advisor to alert you with sounds. This will make your work significantly easier, reducing the time required for performing graphic analysis, expecting signals, and opening and closing positions.

Although there is quite a variety of Expert Advisors on the Internet, only a few of them can really generate profit. If you use all the trading robots you have downloaded from the Internet simultaneously, there is a big risk to loose your money. This is the reason why traders should be very careful when creating trading robots. Also, not to forget that the results of algo trading on a particular forex currency pair, which are achieved with the help of an EA, may be completely different from the ones achieved when trading on the other pair. For this reason, experienced traders prefer to use their EAs for trading on those instruments they have already tested them on.