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Auto-trading software: what is it and how does it work

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Auto-trading software: what is it and how does it work

Trading financial markets have never been so easy and accessible for retail traders worldwide. A decade ago, this business activity was available only to the experts and initiated traders and banks’ representatives. Simultaneously with the development of the internet and auto-trading tools, the number of casual retail traders increased enormously. In this article, we will explain these auto-trading tools, their disadvantages and advantages, how they can boost your trading performance, and how to pick the right one.

What is auto trading software?

A trading robot is software dedicated to automatically placing trading orders, for example, on the crypto or Forex market. Programmed to follow an investor’s instructions or strategy, the trading robot is operational 24/7.

Auto-trading robots: usefulness

Negotiate, buy and sell shares at very high speed: a trading robot is intended to carry out arbitrages by replacing the trader to optimize transactions.

Most often, the robot’s operation is mimetic: it copies the positions of traders and reproduces them on behalf of another investor using mathematical algorithms.

Trading robots can be offered to clients by brokers or sold by independent companies to be integrated into trading interfaces. There are several hundred available on the market. Some are multi-asset trading tools, while others focus on only one asset. Prices vary as well as features of course.

The operating logic of trading robots

Trading software is a computer program (algorithm) built to make investment decisions on behalf of a trader. After summarizing the different signals on the market, this software is designed for placing buy and sell orders. The bot is non-stop operational, constantly analyzing signals from the markets. The most successful trading robots process 7,000 orders within milliseconds.

Trading robots: advantages and disadvantages

High-frequency trading now accounts for 50% of orders placed worldwide and more than 70% in the United States. Its growing importance demonstrates the effectiveness of technical debt.

According to its supporters, this algorithmic trading has several advantages:

  • It makes the market more liquid;
  • It lowers trading costs for both companies and individual investors;
  • It makes it possible to obtain a better valuation of the assets because their price adapts continuously to market demand.

According to their detractors, trading robots have a negative role:

  • they increase the volatility of financial markets;
  • they accentuate the discrepancy between the market economy and the real economy;
  • As was the case during the flash crash of 2010, they can cause an uncontrollable chain reaction if the information coming from the market “bugs” the algorithms.

How to choose the right auto-trading software

Naturally, you will look for the one that suits your trading preferences, according to the assets you want to trade. The most important aspects to look for are the accuracy rate of the software, fees charged for transactions, customer support efficiency, and security. All these important factors are meticulously analyzed in software reviews. BitiCodes review is a great example of a detailed overview of the most important features and trading opportunities offered by crypto auto trading software. Besides, before stepping into auto trading, check out the opinion of other traders and software users by visiting various trading-related internet forums.