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Why Automate Your Trading Strategies?
The task of any trader is to consistently make a profit by managing their accounts in the currency or stock market. To do this, a trader needs a trading system with clearly defined rules and restrictions.
Aug 3, 2021
5 min read
Peter JanssenMarket expert

If you try to formalize the basic conditions of your trading strategy, you will notice that it is quite possible to write them down in the form of an algorithm, and therefore to automate them.

Why do you need to automate a trading system?

robot hand

The first reason is to make sure your strategy actually works. Suppose you have an interesting system that has been working for the past few days, but you are not sure if it will work in the future and what results it might have had in the past under various conditions. To do this, you need to test your strategy on historical data, and for this you need to automate it. You may not plan to trade with a robot, but checking on historical data will give you a much greater understanding of the potential of your system.

The second reason is to determine the optimal risk management and the effectiveness of the system. Your strategy may work great and be profitable now, but without history tests, you can't tell what kind of money management will be right for it. The market is very changeable, volatility can increase dramatically and simply destroy your account if the risks were overestimated. Backtesting gives a complete picture of the possible drawdown and profit at any time interval. It is much better to test your trading hypothesis in the strategy tester than on your real account.

The third reason is an objective view. When trading their own money, a trader experiences increasing emotional stress and stress. This begins to turn into a routine state, and as a result, complete bias arises. Often, a trader with a reliable and profitable trading system constantly loses money because he cannot cope with his emotions. Trade automation solves this problem 100%.

The fourth reason is freedom. Yes, most people trade for this very purpose. Everyone wants to get enough money and not work eight hours every day. But manual trading is not much different from daily work, you will still have a lot of stress, a lot of time will be spent on the trading itself and preparation for it, and any mistakes you make will be instantly punished in the form of losses. You can get real relief from all this if you automate your trading system. Think over the robot's algorithm just once, and make a profit for several years. Of course, the development of a trading advisor may take several weeks or months, and in addition, from time to time you need to change the settings under the current nature of the market, or make small changes to the code. However, all the work will be done by the robot, trading on your VPS.

Is automation worth it?

decision

The main idea of ‚Äč‚Äčautomating trading strategies, described in this article, is to determine whether it works or not, and if it works, then under what risk parameters and when. This can be determined solely by the history of transactions. There should be a lot of trades in history, 10 trades do not show anything at all, as well as 50 or 100, unless your strategy works on higher timeframes. It will take several months to complete a sufficient number of trades, besides, when trading manually, you will most likely constantly experiment and change the system parameters, which will make your trade history useless for analysis. For this, it is necessary to automate the strategy in order to get a complete picture of its potential without spending a lot of time.
When a trading robot is developed according to your system, you can learn everything about it. In the strategy tester of the MT4 or MT5 trading terminal, you can test the robot on any timeframe, any currency pair or other trading instrument, check how it works with different settings, see how it behaves during news and much more. Several years of quote history are usually available for testing, this is quite enough to evaluate your trading robot. In one day, you can find out what would take several months at best.

What is more profitable

benefit

What is more profitable is to pay the programmer a lets say $ 100 to develop a robot according to your strategy or try to analyze it all manually. In the first option, you will immediately know if your system is worth using. You will simply test the robot and in a few minutes you will see trades in history, everything is very clear. In the second case, when the trader himself tries to analyze, there is often no objective assessment. In any system, there are times when it works perfectly and traders cling to it and will see only what they want. As a result, there is a false feeling that the system is very profitable and a person starts trading, often immediately on a real account. Then, within a few weeks, the trader loses money, and after a while he returns to the same strategy, but with some changes and… again loses money. As a result, he loses more than if he paid for the development of the robot.

It is often much more profitable to automate trading just to find out that you shouldn't mess with some trading systems. This way you can eliminate potential losses and gain valuable experience that could cost you much more. If you are serious about trading and learning about different trading systems, we recommend that you carefully study and analyze the trading statistics of a robot, and it is best to do this when you have a trading robot. You can contact our specialists in the development of automated trading systems, we are always ready to help share our experience. We wish you success in trading and stable profits!
 

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