Trading has a new buzzword; algorithmic trading wherein traders use trading software to facilitate trading at the stock exchange. This software aided trading is lightning fast and enables the execution of trade orders with accuracy and precision. An automated Metatrader4 is a perfect example. It is no wonder that how to automate mt4 is a popular keyword query for understanding the concept of the same.
What is Algorithmic Trading?
Simply speaking it refers to a set of pre-set instructions given to the software to complete trading. Herein stocks are bought and sold based on certain parameters that the trader inputs into the software beforehand. The main aim is to identify profit opportunities dynamically and place trades with a frequency and speed which is impossible for humans to match. Accuracy and speed; these are the two advantages which have resulted in algorithmic trading becoming so popular.
An algorithmic trading platform can either be bought or built. The ready-made ones usually come with a trial period. This should be availed since the use of faulty software usually results in huge losses for the trader. Thus it is crucial to choose the Best API Trading Platform to facilitate profitable algorithmic trading.
Build or Buy
Both have their advantages. A ready-made algorithmic trading platform offers quick access to trading. Building one will take time but offer the user absolute flexibility to personalize the same. Usually,ready-made software is full of faults which might hamper stock trading while the extremely good ones are extremely costly. Building the software also does not guarantee that it would be foolproof.
Ready-made software might offer a trial period with limited functionality or full functionality with a limited period for trials. Either way, the trial period needs to be explored to understand the utility of the software.
For building algorithmic trading software like the highly accurate and popular Metatrader-4 automated trading, it is better to make use of a free source algorithm as these can be easily customized. A search query such as how to automate mt4 easily churns up options for the user to choose the same.
Some basic features which need to be present irrespective of whether the software is bought or built are:
- Company and Market Data Availability: Market data and price quotes based on real-time, open high and close volume etc., need to be an integral part of the software. Either it should come built-in or in the form of a provision which can integrate this data from alternate sources.
- Market Connectivity: Trading takes place across multiple markets. But the data feeds available from the same might be in different formats. The software trading platform should be able to accept the same.
- Latency: This refers to the time delay that occurs when data from one app moves to another. To be the Best API Trading Platform latency needs to be reduced to microseconds.
- Configuration and Customization: The software needs to allow a superlative configuration and customization so that the trader is not constrained by the built-in rigidity of the software.
- Program writing Functionality: Software offering coding in the user’s choice of programming language needs to be considered.
- Back-testing Feature: This enables trade simulation on historical data so that a trading strategy can be tested before its adoption.
Other important features which also need to be there include trading interface integration, plug n play,programming should be platform-independent etc. To be able to gain out of algorithmic trading, the core of the software needs to be explored and understood.