When a computer program is used to trade orders, it requires a process known as algorithmic trading. The computer program would carry out the trades by following a defined set of instructions to identify good opportunities to make profits. The ultimate goal of algorithmic trading is to make gains with the kind of speed that is beyond the capacity of a human. But the reason why they’re so popular at the moment is that they are highly accurate and extremely fast when it comes to executing crypto pair trading.
Types of algorithmic trading
Below are the various and the most popular types of algorithmic trading programs that one can explore:
A bot cannot function on its own until the trade parameters and functions are set by a human trader. Once this is done, the bot can automatically carry out trades: General parameters are as follows:
- A signal to make a purchase or sell an asset
- Highest/largest size of the position
- Defined stop and exit price points
Other than carrying out trades in an accurate and objective manner, bots are programmed to follow specific strategies. This can be very helpful because it completely eliminates the psychological and emotional aspect of trading which may also be a cause of worry for even the most seasoned traders.
Alert bots (semi-automated)
Alert-bots require human intervention to a certain extent. Though these bots will skim through the market for the correct trading signals, the parameters for these have to be ascertained by the human operating it.
Instead of being completely automatic, alert bots would identify the trading signals or indicators and notify the user. The ultimate decision to carry out a trade, in this case, depends on the end-user, i.e, the trader.
There can be different types of alerts here from trend line breaks, support and resistance breaks, and volume spikes to MACD, Relative Strength Index (RSI) to even simple moving averages.
Despite the fact that signals rely on automated bots, algorithm trading strategies can also be used via third-party signals that may not always be related to a particular technical setup.
For instance, if you choose to trade a particular index that follows a prominent economic report that happens to give the consensus estimate a miss. Additionally, these trading signals may also be from bid/ask spreads, order volumes as well as other market variables in play.
How do you identify the variables? Basically, these could be anything that can influence a financial instrument’s price. In such a case, any event that could cause price fluctuations can be referred to as a market signal. You can also check out various third-party firms that send out trading signals for algorithmic trading via newsletters, RSS feed, or personal communication channels like Telegram.
Note that copy-trading aspects are automated for the copy trader and not for the one whose portfolio is being mimicked. Copy-trading features can be treated as a type of algorithmic trading as the copy-portfolio will automatically update and add changes if there are any modifications in the main portfolio.
There are several online trading platforms that offer copy trading services so that amateur players can build strong portfolios with the help of the expertise of seasoned players.
If you are a trader who likes to operate through a one-stop shop for your trading requirements, several brokerage companies are out there to provide you with everything on a single platform. Many of these firms have proprietary trading signals services, trading bots as well as alert bots to facilitate algorithm-based trading.
Best Algorithmic Trading Platforms for 2022
1. eToro’s copy trading
There are over 25 million users on eToro which is a multinational online trading platform. It hosts a diverse set of market portfolios that consists of stocks, ETFs, indices, metals, agricultural products as well as various other commodities. This broker will also allow you to access more than 60 currency pairs and as well as cryptocurrencies to trade on.
The copy trading tool is a key feature on eToro using which you can easily imitate the trading pattern/style of experienced traders.
2. Bitcode AI – for beginners
Promoted widely as a trading software exclusively for cryptocurrencies, Bitcode AI is known to be fully automated. It operates on a state-of-art AI which allows you to keep trading passively. The algorithm is programmed to skim the market, collect important data and also make trading decisions for you. While you would not have to enter any parameters manually, you still have the option of customising the settings as per your requirements.
3. Oil Profit – for commodities
A commodity such as oil can be tricky, especially when you want to look for a platform that supports algorithmic trading for it. Though there are numerous options for stocks and even cryptocurrencies, Oil Profit is one of the few platforms for this particular commodity.
Crude oil prices are determined by global economic and political factors and thus, it demands for a system that takes these into consideration. Oil Profit uses an advanced AI to allow automated trades by scanning through all of these market variables.
4. NAGA – for copy trading
With 0% commission for stock trading and access to more than 950 assets through CFDs, NAGA has to be one of the best algorithm trading platforms in the market. A minimalist provider, NAGA has an intriguing copy trading tool that can be automated. It also allows you to pick the investor whose trade you want to copy.
5. NFT Profit – for NFT Derivatives
The cryptocurrency market has been taken by the storm by NFTs, that is, non-fungible tokens. By using NFT Profits, you can cash on the fast-growing market of NFT derivatives that are increasingly becoming a great option for investment. NFT Profits is one of the handful of algorithm trading platforms that allows you to access the market.
It also uses a rather interesting and innovative program to boost NFT investments. Note that this platform would utilise your funds initially to buy the cryptocurrency Ethereum which will, in turn, be used to buy NFTs for your portfolio.