Automated trading software is based on a specific algorithm used in trading. This algorithm is nothing but a step-by-step instruction manual that can be executed automatically to get you better trading results.
There are only three options when it comes to the creation of custom algorithms meant for trading: you can build it yourself, buy a one-size-fit-all software from some companies, or hire someone to do it for you. Also, when you purchase an algorithm, it might offer you a free trial version with restricted actions, after which you will be asked to pay for the full version.
How Does Algorithmic/Automated Software Work?
This algorithm can be executed to perform a set number of tasks before it places a trading order for you. This algorithm is used to detect positive trading spots for you automatically, and then you can invest your hard-earned money into those predicted ventures.
The speed at which the orders are executed in these kinds of software is more than a human’s capacity. Simultaneously, these are more accurate than a human can ever be at placing profitable orders. This is why trading through algorithms is going towards becoming the next hot trend.
The Main Features of Automated Trading Software
- Connects to Various Markets
Traders are usually busy looking at different markets simultaneously to find that ideal window for investing in the trading market. The automated trading software can do this easily for you since they have access to the data from various trading servers, all at the same time.
- Has the Data From Companies and Market at its Disposal
These programs are custom built for trading markets, and as such, keep an eye on all the market data and price points. A few programs are developed to keep an eye on a particular company’s earnings, again giving you a window of investment, which can prove to be profitable for you.
- The Latency of Executing Trading Orders Can be Reduced
Latency is the difference between the time taken to analyze the market data and then execute the order from the said company. This difference can be reduced to a considerable extent.
- Algorithms Can be Tailor-Made to Suit Your Needs
Such programs can be built according to your specifications, usually costing more than purchasing an existing software.
- The Ability to Create New Programs
The common programming languages for making trading algorithms are Perl, Java, Matlab, Python, C++. But most probably, you’ll be sold an algorithm with the built-in ability to change or add-on to the algorithm somehow.
- Uses Old Data as its Training Set
Trading algorithms can be fed old data to generate a profitable outcome, which the algorithm then uses to predict future strategies. These strategies should prove to be helpful to you. This feature is also pretty much a mandate for the newer algorithms, but the only catch is older data availability.
- Integrates Into the Trading Interface
The automated trading software makes its own decisions. But the software should be assisted by a human broker network where all trades are happening.
- Doesn’t Depend Only on One Platform
Algorithms should be programmed using such computer languages that can work across all platforms. Perl is an excellent example of such cross-platform programming languages. But the scenario can change at any given moment, so you should look for a platform-independent language.
This sort of automated trading software doesn’t come cheap. So before investing your pretty penny in these, you should do thorough research on your part.
Whether you’re more inclined to buy custom-made software or build it through a developer’s help, you should see whether it meets all your requirements. You have to do enhanced research before making the final decision unless you want to incur huge losses.