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How To Get Started With Algorithmic Trading?

Investors often spend hours and days researching to hunt the pit bottom of trades, be it, beginner, mid, or advanced traders, all have been into this thrill. 

When one seizes enough skills to analyze charts, rules that determine whether one should buy or sell, how to use custom indicators, how to go with market moods, and more, it becomes a fulfillment factor for them to validate they are advancing to the next level. Though this phase of familiarizing ourselves is essential, this often leads to losses in an overwhelmingly fluctuating market.

Not to forget, trading is an art and math. Humans often intertwine it with a gut feeling, instincts, and luck and rush into aggressive leverages, ‘I know this pattern’ Deja Vu’s, or pre-mature ‘let’s take the money out’ thoughts to see the chart getting pumped to higher within few days. 

And these are precisely the attributes that trading bots won’t own, delivering more stable, mathematical, practically proven profits.

What is algorithmic trading?

Automated trading, also known as algorithmic trading, a hands-off approach with a competitive edge, is getting its popularity to its peak worldwide by share, growth size, key segments, and exponentially increasing its scope each year. 

Detecting the perfect signals to drive significant gains with superior computational speed and power to investigate thousands of stocks/cryptos at once is a gift; growing money over algorithmic trees seems to be the new normal.

Model a strategy

Define and design a backtested trading strategy with a large set of sample trades or data that leads to optimal accuracy to produce the highest possible positive return or at least feasible positive returns before moving into live execution. One can make custom bots with different trading strategies, considering:

  1. Macroeconomic news.
  2. Fundamental analysis.
  3. Statistical analysis.
  4. Technical analysis.
  5. Market microstructure.

There are also strategies beyond the usual trading algorithms. Bots can see through hidden variables to make a good profit which limited trading actions by humans cannot produce. One of the infamous examples occurred in Feb 2021. An Ethereum trading bot strategy ‘extracted’ $107M in 30 days with a miner extracted value (MEV) using an arbitrage strategy. 

An example model: (Simple RSI)

  • When RSI crosses 60.18 on the 4-hour chart, buy with 10x leverage.
  • Sell when the gain reaches 5% i.e 5*10= 50% gain
  • Sell if RSI crosses down 60.12
  • Do not enter once closed within 4 hours.

In this example, we can observe that a trader using screeners with alerts will not be able to place multiple cross-overs simultaneously. When RSI crosses 60, it is often quick to go up and quick to come down. Other bots might start to place the order, and it could be any time, any day. 

If you have a bot in place, you could even sleep and make sure the same strategy you use is automatically applied more accurately. Applying other indicators like 200MA and the pivotal points technique can make the strategy work flawlessly.

Risk management

A forex trading robot is more risk-free and established with significant stability. One can encounter resources to achieve considerable income without much volatility. Make sure you’ve also created a personal risk management profile that sets stop limits at multiple levels, outweighing pattern breaks by institutions or trade platforms. 

Deriving better chances

A proper framework is required to increase trading results. It is helpful to observe the methods and strategies that whales use. In February 2022, PWE Capital launched the European Regulated Fund after generating 124% cumulative returns with a win ratio of 77% with an average monthly return of 21%.

PWE Capital created a phenomenal result with the power of algorithmic trading, relying on MQL5 programming language’s flow control and its potential to create wealth, allowing funds to achieve top results with its high-frequency trading capacity in the currency, commodities, and derivatives markets. 

Trading and investing communities

The breakthrough platform, leading algorithmic trading community MQL5, is set out to turn 18 this year. The community is also a point for many who require full-time income by delivering others with the required, requested trading solutions. 

If one has a great strategy in mind, they could easily manifest it with the help of well-acquainted numerous freelance developers. And there always be forums that help shed light on new algorithms, tools, and technological advancements in the field, which are catalysts to profit gain.

Resource requirements

It is also wise to seek out all built, tested results demonstrating advanced algorithmic trading resources. A well-documented forex market of trading robots, indicators, and trading applications with past results are all showcased at MetaTrader 5 Market

On top of this, one would need Virtual Hosting (in-house, Google cloud, AWS, or MQL5 Cloud Network (which could do a week of manual work in minutes) to run the algo trading flawlessly. For such, MQL5 empowers traders with many resources like a Strategy tester, free pre-written codes, and not to forget freelancing developers who could suggest and deliver solutions.

Summing up

In the coming future, algorithmic trading will thrive whether one likes it or not, and bots will outsmart even advanced traders who don’t share the view of human-computer collaboration. The one who starts acknowledging and getting involved in algorithmic trading now will undoubtedly have the upper hand and could create consequential wealth.

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