If you’re an independent Forex trader looking for ways to optimize your trade execution and avoid missing great trading opportunities, then you could consider automating your trading strategy.
There are a variety of options available for automating trading strategies. This post seeks to evaluate each of them in terms of affordability, flexibility and time commitment.
• Programme your own strategy
The best way of ensuring that an automated strategy meets your exact needs is by programming it yourself. This way, you can incorporate whatever features you want. However you will need a certain amount of expertise in programming languages such as Java or for the MT4 platform, MQL4. Once your strategy has been coded, you will then need to integrate it with your trading platform through the application program interface (API). So, while this approach offers the most flexible approach to automated trading, it is still beyond the capabilities of most retail forex traders.
• Hire a programmer
If flexibility is important but you don’t have the programming skills to develop an automated strategy yourself, there is always the option of hiring a programmer to develop the strategy for you. But while this will save time and effort, there will obviously be a cost involved. Additionally, you are not really in charge of the development process and translating your strategy to code may prove to be a challenge. Most programmers will charge an hourly rate of approximately $50- $100, depending on their experience. Freelance websites, such as elance.com, can be good places to find programmers while MetaTrader offers a forum where traders can advertise requests for freelance developers.
• Buy a strategy developed by a 3rd party
Buying an existing strategy that has been developed by a 3rd party is a more affordable option than hiring a programmer. However the chances of finding a strategy that exactly meets your needs are pretty low. You also need to make sure you are buying a strategy from a reputable provider as the quality of some of the products on the market is questionable at best. Several trading platforms, such as MetaTrader, X Open Hub and NinjaTrader have launched their own dedicated marketplaces that sell automated trading apps. Many of these apps are rated by previous users which helps with quality assurance.
• Build your own strategy using a code generator
Using a code generator to build an automated strategy is an affordable option that offers a degree of flexibility. Some technical know-how is required and you may still be limited with the range of features that can be incorporated. What’s more, once the code has been generated, it can be extremely difficult to make any changes. TradeStation, a trading platform that offers a range of trade automation tools, allows users to build their own strategies using Easylanguage, a programming language that has been developed specifically for use with the TradeStation platform.
• Sign up for a copy trader account
Copy trading is one of the easiest and most affordable ways to get started with automated trading. Once you sign up for a copy trading account, you can choose to simply mirror the positions of another trader. However novice traders should be careful who they choose to copy. A seemingly successful trader may only have generated impressive returns recently while suffering heavy losses in the long term. Additionally, bear in mind that copy trading is clearly not actually trading but just mimicking someone else which is bound to have serious limitations for personal input and control. Etoro is one of the most popular copy trading platforms while ZuluTrade is a copy trading app that can be integrated with various platforms.
• The next generation of trade automation
A new generation of cloud-based forex trading software has recently emerged making trade automation easy and affordable while offering traders complete flexibility as to which features they would like to incorporate. Offering a highly intuitive web-based user interface, Magick is built on a so-called Complex Event Processing engine which provides ultra-fast decision logic and supports complex strategy structures. This allows traders to create and deploy their trading strategies in minutes and adjust it as often as they want. The platform integrates seamlessly with most online brokers through API.
What model works for which forex trader will depend on a variety of factors and there is no right or wrong. Nevertheless we’d love to hear from any traders who have tried automating their strategy before. Which tool did you use? Would you recommend it? What is missing in the market-place?
Be sure to let us know!
Posted by Thomas Nyegaard
Ex-investment banker now working full-time as angel investor and entrepreneur. Now dedicating all my time to Magick, a new start-up that develops financial trading software designed for retail forex traders. This is a project that fits me perfectly as it combines my extensive financial markets experience with my passion for investing in start-ups and helping these mature into real businesses.Facebook LinkedIn Twitter Google+