Here we review the best automated day trading software of 2020 and explain how to use automated trading strategies successfully. More than 75% of stocks traded on US exchanges originate from automated trading system orders. Known by various names, including mechanical trading systems, algorithmic trading, system trading, and expert advisors (EAs), all of which work by allowing day traders to specific rule entry dates for trade entries and exits.

 

 

Once programmed, your automated day trading software will execute your trades automatically. Sounds perfect, doesn’t it? You can sit back and wait while you watch the money.

Automated day trading explained

You decide on a strategy and rules. They are then programmed into automated systems and then the computer takes over. The software you can get today is incredibly sophisticated.

Trade entry and exit rules can be derived from simple conditions, such as moving average crosses.

However, they can also be built on complex strategies that require a deep understanding of your platform-specific programming languages.

Once the rules are programmed, automated systems can monitor the market, deciding whether to buy and sell based on the specific day trading strategy rules you have chosen.

Although it depends on your specifications, once a trade is executed, orders for protective stop loss, stop loss and profit target will be automatically generated by our day trading algorithms. Friend.

If you are in a fast-moving market, immediate entry can be the difference between a small loss and a broken earth if the trade goes against you.

Some advanced automated day trading software will even follow the news to help execute your trades.

Strengths and Weaknesses

Strength

  • Emotion Reduction – One of the biggest benefits of automated day trading algorithms is their ability to eliminate human emotions. Many day traders will buy and sell based on emotions, automated day trading systems will execute trades as soon as specified rules are met.
  • Backtesting capabilities – Most automated systems will allow you to test your rules and strategies against historical data to test their likelihood of success. This allows you to hone the perfect strategy and settle any folds before you put real money in the line. It also allows you to determine how much to expect from the system (how much you can expect to win or lose).
  • Speed – Your automated software will give you advanced order speed entry. Ability to automatically change according to market conditions and create orders as soon as commercial criteria are met. In the day trading game just a few seconds can make a significant difference to a potential win or loss. It will prevent you from reaching your profit target or plummeting past the stop before you have even managed to enter the order.
  • Consistency – This links back to the emotional element. If you lose in the last four trades, you might get cold feet the next time around. But if the next trade is a big winner, you have shot yourself in the foot very expensively.
  • Cement a winning formula – If you’ve spent years perfecting a winning strategy, automating it can make it even more effective. Which can in turn give you bigger and more consistent profits.
  • Diversity – Automated day trading system that allows you to increase your hand using multiple accounts and any number of strategies at the same time. This allows you to spread your risk across different instruments while still hedging lost positions.

Weaknesses

  • Over-optimization – The focus on curve tuning leads to automated day trading algorithms that are great in theory, but often fall short when trading live. For example; a lot of people refine a plan with almost 100% profitable trades without ever having a problem. Apply it to a live market however and it could completely fail. This is why you should stick with low value deals until you clear all the folds.
  • System malfunctions- Even the best automated day trading software can trigger the wrong trend. As the price reacts to the unfolding development, a false trend can spiral out of control. This was demonstrated in August 2012 by the Knight Capital team; who lost more than $440 million in just half an hour when their trading software struggled in market conditions.
  • Updates – Your automated day trading software will need updating with changing market conditions. This means you need someone who knows exactly what they are doing. This puts you at the pity of whoever writes and updates your software.
  • Monitoring – People mistakenly believe that once they have built their automated day trading strategy, they can sit back and let the computer do all the heavy lifting. You need to watch out for computer crashes, connection problems, market anomalies. Not mentioning anything else could result in missing or duplicate orders.

 

 

Begin

Even with the best automation software there are a few things to keep in mind. First, keep it simple while you gain some experience, then move on to more complex automated day trading strategies.

Copy Trading can be a solid introduction to automated trading beginners.

Many automated systems are tailored to excel in certain markets and for specific trading styles.

So keep in mind that you may not get the profits you hoped for if you apply your automated day trading algorithm to a number of different markets.

Whatever your automated software is, make sure you create a purely mechanical strategy. Automated day trading systems cannot make predictions, so remove all caution.

Copy Transaction

At its most basic level, copy trading is a very simple form of automated trading.

With Copy Trades, you can copy another trader’s trades. So, by looking at past performance and specific trade details, you can ‘follow’ one trader, (or better yet, a group of traders).

As they open and close trades, you will also see those opened on your account. You can adjust how much you want to invest, so someone with $100 can still track someone’s trade making $1 million.

Copy trade means you are not responsible for the opening and closing of trades. You still need to choose traders to copy, but all other trading decisions are taken out of your hands.

Copy trading is probably the least hand on the network of any automated trading.

 

Searching for the best automation software

There is no one size fits all when it comes to automated day trading systems.

It will depend on your needs, the market you want to apply it to, and how much customization you want to do yourself.

Skilled traders may even want to develop their own trading software from the ground up, to achieve super fast automated trading, completely customized to their preferences (more on that later) .

Here are some of the most popular ready-made automated systems available:

  • AlgoTrader software
  • MetaTrader (MT4 and MT5)
  • Traditional automation software
  • Etna Automated Trading Software
  • Automated trading software eSignal
  • Automated Software Option Robot (binary trading only)
  • Roboadvisors

Develop your own software

If you cannot find a commercially available software that gives you the functionality you need, another option is to develop your own proprietary software.

Doing so is easier than ever thanks to code editing tools like VIM and online marketplaces that make it easy to find freelancers with the necessary skills.

Developing your own software comes with a number of benefits and risks:

Benefits:

  • Full control over how the software works, looks and feels.
  • You can optimize the software to work faster than commercially available software because you can only
  • include the features you need.
  • Allows you to build software around complex algorithms.

Risk:

  • It can be expensive if you don’t know how to do it yourself. Like most construction projects, the final cost often ends up being higher than the initial estimate.
  • The software will be untested and will almost certainly contain bugs. Trading software has been through thousands of hours of testing and is used by thousands of traders, which shows many problems. Your software may behave in unforeseen ways. Even major trading operations have problems with trading robots that make surprising trades or are triggered by the actions of other robots to execute massive sell-offs.

Research all the software available in the market before you decide to develop your own.

There are two main ways to build your own trading software. Do it yourself or hire someone else to design it for you.

Self-programming software

Designing your own trading software requires a basic understanding of programming as well as knowledge of how to code trading algorithms.

Many software packages help make the process easier, but they all require you to have basic programming knowledge.

No tool can help a lack of programming skills, but for savvy programmers, one of the best editors for building your auto trading bot is  Vim .

Vim is a universal text editor specially designed to make it easy for you to develop your own software. It was created by Vim’s founder, Bram Moolenaar, in 1991.

Vim is based on Bill Joy’s vi text editor. Vim is “charity” software – all proceeds are used to help children in Uganda. Vim makes it very easy to create and edit software.

 

Vim is a command-based editor – you use text commands, not menus, to trigger various functions.

The command-based interface allows the software to have a very light clean interface while still providing a wide selection of features.

Vim is suitable for newbies and experienced developers.

The platform is very popular among software developers as it makes it easy to review your code and find errors before they cause any problems.

It can be customized to handle hundreds of programming languages and supports a wide variety of plugins for additional features.

 

 

API

If you choose to develop the software yourself then you are free to create it almost any way you want.

However, your freedom will be limited by the API (Application Programming Interface) provided by your trading platform.

The API is what allows your trading software to communicate with the trading platform to place orders.

Your trading platform can only execute trades that are supported by the third-party trading platform API.

If a particular feature is important to you then you need to make sure to choose a platform with an API that provides that functionality.

Your bot will also have to ingest market data in some way, be it in real time online (with extremely low latency), if your trading algorithm in any way has to react. with what is happening in the market.

If trading decisions are based more on fundamentals and just waiting for the price to be right, getting market data with millisecond latency may not be necessary.

Hire a software builder

If you don’t know how to create software yourself, or if you don’t have the time to do so, then you will have to hire a freelance or third-party company.

You can choose a local developer or an online freelancer. It’s easier to communicate with it and achieve the desired results, using a local developer that you can see in person.

However, using an online freelancer can be cheaper. It may also allow you to choose a developer with more experience in software trading, as this is a rather unusual skill.

Be sure to hire a skilled developer who can develop a stable piece of software that works well. Don’t try to get it done as cheaply as possible.

Good trading software is worth its weight in gold. A poorly designed robot can cost you a lot of money and in the end very expensive.

It is essential that you provide the developer with a detailed description of what exactly you expect from the trading platform. Include all desired functionality in the task description.

Don’t assume anything is everything. Developers cannot read your mind and may not know or guess the same things you do.

Final Judgment

Automated trading is becoming more and more popular. However, if you are going down that route, you must regularly go back and forward to test your strategy. Let’s be clear though, there’s no substitute for careful manual trading.

If you put your trust in automation, don’t be complacent.

This was highlighted in Jack Schwager’s ‘Market Wizard’ series of books, where he interviews successful automated day traders.

They all emphasize that they take great care of their automated strategies, so don’t take the backseat to your trades.

Read more

  • Quantopian.com – a website to study historical stock price data and write trading algorithms that can be backtested on that data.

Study

  • Exploring Automated Trading: Modeling a Financial System with a Level of Automation, Variable Evaluation and Display Design, Yeti Li, November 2017
  • Evaluation of the performance of automated trading systems based on non-parametric methods, therefore, TN Batova, TM Sizova, AV Khomkov, December 2017

Book

  • Professional automated trading of the brand: Theory and practice
  • Automated Options Trading: Creating, Optimizing and Testing Automated Trading Systems, Serge Izraylevich PhD, Vadim Tsudikman
  • Cryptocurrency Trading Technology and Algorithms: The Complete Guide