What is Automated Trading?
The financial markets are very complex and controlling them is not easy - especially without applying the enormous time and effort required to create and maintain a long lasting profitable and stable record.
Over the last few years, alongside the evolution of the markets and technological breakthroughs, advanced and smart trading systems have evolved. These systems allow different levels of automated trading and they have gained a lot of popularity over the past few years.
Automated trading (also known as Copy Trading, Bot Trading, Black Box Trading, Robotic Trading, or Algorithmic Trading) is the most advanced field among Forex traders. It is done by using a software written according to a predefined strategy and it is a major solution for replacing the merchant's job. It allows fast and accurate trading, while processing endless data all in a split second.
In the past, automated trading systems required a lot of technical knowledge. Their definitions were complex and were intended primarily for professional and experienced traders.
Today, automated trading technology is much more user-friendly and they serve as a great tool for new, inexperienced traders interested to start trading Forex, Indices, and Commodities without having to learn the market inside out.
What are the different methods of automated trading?Copy trading
Copy trading enables users to automatically copy positions opened by an experienced trader, who trades on the various financial markets. This method is carried out using computer systems that connects to both brokers and users, with the experienced trader in the middle. With copy trading, the investor has the ability to automatically “copy” every operation executed by another trader, in order to replicate his performance on his own personal account. It is based on finding a trader that meets a user’s criteria and then configuring the platform settings to start copying their actions.Expert Advisors (EA)
An Expert Advisor system collects vast amounts of data and process it to create a complex model based on a set of pre-defined YES/NO rules. It analyzes charts of the assets on which it operates and collects data from indicators according to the defined strategy. When identifying the direction of the trend and the point at which to open a transaction, it calculates the size of the transaction according to the size of the account and the level of risk. It then manages it according to what is happening in the market and according to strategy rules, before ending the position.Algorithmic trading
Algorithmic trading works by using very complex algorithms and sophisticated trading systems that carry out buying and selling operations in milliseconds. Automated trading activity carried out by algorithms exists in both trading robots and online trading platforms. These sophisticated factors can detect market movements and factors at peak speed and may perform thousands of operations before a human trader could notice and start operating.Social trading
Social Trading is a method that allows traders to share copies of their trade book and instructions for market entry and exit points with other traders. The sharing is done via dedicated marketplaces that serve as the hub for all the traders to share their ideas and concepts.
How do automated trading strategies work?
Automated trading strategies are usually based on mathematical and statistical thinking. They use coded algorithms that detect market pulses and statistical indicators mostly from the technical analysis world.
Once all the data is calculated into the algorithm the system can determine when assets are at a price that is right to enter the market and take a position.
Automated trading strategies are considered to be beneficial thanks to their ability to act quickly and unemotionally as they utilize strictly professional parameters to analyze the market. This enables superior trading decisions in real time compared to a human trader, while staying active in all market conditions whether volatile falling markets or rangy and close.
What is an automated trading platform?
An Automated trading platform is a system that can stand alone or integrate with existing trading platforms (like MT4). It serves as a marketplace with a wide range of strategies from which the customer can choose one or more and automatically copy the trading activity directly to their own trading account.
The trading activity from the chosen strategies is then duplicated on the user’s account based on entering a certain set of criteria like the copy ratio or funds to allocate to a strategy.
DupliTrade automated trading platform advantages
- Trade like an expert - enjoy the performance of experienced traders without becoming one yourself. Follow experienced successful traders and benefit from what works for them.
- Save time and resources - no need to waste your time on countless trading courses. Invest your valuable time on other ventures instead of spending it on manually locating and executing trades.
- Diversify - Manage multiple investments at the same time.
- Proven strategies - work free of natural emotional influence for improved decision making.
- Avoid human error - there is little to no human physical intervention.
- Monitor - the system is programmed to do things on your behalf according to predetermined conditions and automatically update in real time.
- Simulate past performance - DupliTrade’s automated trading platform allows you to test how you would function over different time frames and build your automated portfolio accordingly using the unique forex automated trading simulator.