While selling and buying stocks on a regular basis, many times, the trader fails to put in an order at an accurate time. This costs adversely to the investors and traders. To save you from this, autotrading stocks can be done. Auto trading, in simple words, can be described as a technique of automatically putting a selling or buying order based on a constant and particular concept. The orders are placed in the specific stocks whenever their on spot situation in terms of performance is met with the ones your system stated. You can release and make these conditions as you like Or strictly according to your requirements.
Learn More About What AutoTrading Is
Autotrading saves you from missing any opportunity that you might fail to catch due to various reasons. Traders cannot be available for putting a selling or buying order during every undulation in the price trend of the stocks. This becomes a reason they fail to get the best price. Autotrading allows the traders and the investors to freeze certain conditions such as capital for putting a selling or buying order. Auto trading requires skills as it is based on high-end programming.
Traders have two main options through which they can move along with the auto trading process. The first one is to create and develop a unique platform to perform auto trading or connect with an existing programming platform and customise your plan according to your requirements. Both the options are appropriate for different kinds of traders and investors.
When we move in the further depth of the process of auto trading stocks, it gets complex. For higher-order auto trading, there is no human involvement of any kind. All you need to do is set the software according to your requirements, and it will complete various processes of auto trading stocks on its own. Apart from the initial setup of the software, the process of auto-trading does not require the human mind to work. However, the traders must keep a close eye on the software and ensure it works as it was supposed to work.
How do Autotrading works?
Autotrading can be understood as a straightforward procedure initially. However, it gets complex with the advancement in strategies and goals you set for it to achieve. The basis on which autotrading stocks works is Strategy. The auto trading programs require a customised or regular approach that will guide the program about trading particulars. The factors such as when and at what cost the autotrading stocks will be executed is dependent on these strategies.
Retail investors use basic auto trading. It is usually a technique where auto trading is invoked only after a certain price level of stocks. The investors and traders who trade stocks on a retail basis can enter the market for trading once a specific price is met for particular stocks. This is the most basic and initial way of performing auto trading stocks while trading.
However, for the investors and traders constantly trading stocks regularly, autotrading becomes different. Regular traders must utilise other types of auto trading available in the market, such as grid auto trading, scalping, fading, etc. Using auto-trading at significant levels require a full proof and carefully woven Strategy.
As for the day traders, it’s beneficial to opt for a platform that allows them to perform auto trading and programming in the same and existing platform. The stocks do not stay with them for a long time, and hence, they must save time and move faster with the process of the autotrading stock. However, the autotrading capabilities in these platforms are less than that owned by the regular and technical traders. This is because the technical traders build their own customised and specialised platform for auto trading.
What are autotrading strategies
While setting up your autotrading portal or platform, you need a strategy. By autotrading Strategy means the essential requirements and ideals on which your autotrading should work according to the holder. By setting up your auto trading strategy, you can control factors such as buying price, selling price, percentage of stocks to be retained in your account, etc.
For the holders in the big autotrading stocks game, the autotrading Strategy is wholly based on the signals offered by the market. They run various highly technical and algorithm-based programs to calculate and analyse certain stocks’ current and upcoming trends. This data then helps them to form an efficient and effective strategy for autotrading stocks.
With the help of data obtained by running these programs on various stocks, the traders can decide several factors. Factors such as which kind of order will be beneficial, the highest price achievable, how much time it will take to buy or sell specific stocks at the desired price, etc., can be decided by analysing results obtained by these algorithms.
Once this data is received, the trader gets a clear picture of and current situation of the stocks. The trader or investor can then build a strong strategy for auto trading stocks on the desired margin. These strategies help the traders to foresee the upcoming trends and profit enhancement from a specific type of stock. One more essential thing traders can extract from these strategies based on the results of algorithms is the upcoming risk and its management shortly. Although these programs are strictly based on verified algorithms, the data analysis can be complex and cause an error.
Due to the occurrence of these errors, there can be undulations in the final outcome of the autotrading process. While building a profitable strategy for autotrading stocks, there are certain factors a trader should keep in mind for paying extra importance. Factors include upward and downward trends, gaps in trends for a certain period, expectancy, performance of the stocks, range of price variation, the scale of selling or buying, quoted price against sold or bought final price, etc. This will help you gain a better picture of the stocks for which you wish to construct an auto trading strategy from all the possible angles.
Various autotrading strategy characteristics
As discussed above, there is a long list of things you must keep in mind while making an auto trading stocks strategy for yourself. The primary criterion on which you must base your auto trading Strategy to gain widened profit margins are:
Decide on a position size
A fixed percentage on the equity amount is done while giving a fixed position size during auto trading stocks. The trader needs to set up a basic or an advanced position size of the account while setting up the Strategy itself. Advanced position size or optimal position size is more calculated than simply fixing a percentage of equity account as position size.
To calculate optimal position size, factors of risk, profit, current and future situation of the stocks is analysed. Then only as per the risk on the stocks, position size is decided and quoted. Optimal position size is not constant and changes with different scenarios of loss and risks in price difference of stocks at the other instant of time.
The trader needs to pay attention to which rate is considered fixed by these algorithms. It can be a starting price, selling or simply bidding price. The traders must set and determine which kind of price they wish to fix as per the program. The price range of the stocks in the current market must be around the thin line of most minor expenses; only then these algorithms and programs can work for auto-trading stocks and become beneficial.
Choose an accurate type of order
While establishing an autotrading strategy, it is essential to study the current market and the performance of the stocks in consideration. The traders and investors must decide which kind of order they wish to put in the market regarding the stocks. For this, they must make the concepts of limit order and stop order clear in their heads. Also, the type and kind of order depend on the stocks’ history and the predicted future. Therefore, before building a new strategy, make sure you recheck your sources and your decisions for which kind of order you wish to put in the stocks.
Keep control in your hands
Although auto trading strategies are highly calculated and technical procedures for auto trading stocks, it’s best to keep a few things constrained to yourself. The traders and investors must keep a few working procedures in their own hands in which artificial intelligence of auto-trading strategies can’t be trusted completely. It’s best to restrain or restrict the program to work for a few minutes while trading at the beginning of the day. This gives you a few more minutes to analyse everything personally and manually.
Autotrading is a highly technical and efficient way of trading. This technique is available for traders and investors of all kinds and trading sizes. Although the working of auto trading is different for different traders yet, the principle remains the same. Considering various factors, you can also create a special and unique auto trading strategy specifically designed for your profit and benefits.
Frequently Asked Question
Is Autotrading a real thing?
In auto trading, the most important parts of trading like analysing the stocks, buying or selling the stocks using automated systems. The automated systems can also carry out both analysis and execution processes. It is an excellent way to earn passively with stocks.
Which is the best auto trade platform?
If you are looking for an auto trade platform, you can try eToro, AvaTrade, Forex.com, And Learn2Trade.
Is MetaTrader 4 paid?
Fortunately, MetaTrader 4 is not paid. It is a free trading platform that you can use to trade forex and other instruments like CFDs, commodities, cryptocurrencies, and indices.
How can you define autotrading?
Auto trading, in simple words, can be described as a technique of automatically putting a selling or buying order based on a constant and particular concept. The orders are placed in the specific stocks whenever their on spot situation in terms of performance is met with the ones your system stated.
Can you become rich with Forex robots?
Forex robots are programmed in a way that they carry out trading. But, you need to know that there is no guarantee that you will be able to get long–term profits and that you will always earn profits.