What is an Automated Trading System?



It may seem strange, but 70% of all deals at stock and cryptocurrency exchanges are done with the help of automated systems. Why is this percentage so high?

Automated trading has many advantages that are hard for beginners and experienced traders to ignore. Therefore, such searches as "algorithmic trading definition" and "quantitative trading vs algorithmic trading" have become very popular.

Algo trading vs Automated trading

Trading software facilitates the work of every user so much that many people have long preferred automated trading to manual opening and closing transactions. 

Trading via computer technology can be divided into two major branches: 

  • Automated trading.
  • Algorithmic trading. 

Consider what is the difference between algo trading and auto trading.

Automatic trading

What is auto trading? Not every person can manually trade on the cryptocurrency market. There are many factors that stop anyone from doing it - lack of knowledge, lack of free time, emotions and possibility of making mistakes. 

However, if you build a trading strategy into the software, it will trade for you. You can entrust it with everything - from analyzing the incoming data and calculating the potential profit-loss level to generating buy and sell orders. You would leave the minimum tasks to yourself - to check the work of the robot from time to time and to correct the settings when the market situation changes. 

In those hot moments when your hands are shaking and you have doubts, the computer will calmly evaluate the situation and buy and sell exactly according to the set of rules it contains. And it will bring profit. 

This particular style of trading is called automatic. In other words, you are entrusting the software to work for you. 

Algorithmic Trading

How trading algorithms work? It is a trading approach that use complex mathematical tools and algorithms to assist traders in making judgments regarding transactions in the financial and cryptocurrency markets. The need for a trader to participate in such a system is minimal. This results in very quick decision making, which is critical in the very volatile cryptocurrency market. This enables the software that executes this technique to identify profit opportunities much before a person does.

It is similar to automated trading, but the principle behind it is somewhat different. Algo trading does not necessarily use computer technology - a trader can implement any algorithms of data processing manually. However, the use of software greatly accelerates this process and reduces the labor intensity of human actions. That's why algorithmic trading is associated with computer systems.

Speaking about program trading vs algorithmic trading we can conclude that the first and the second method are intended to automate the trader's work and to minimize money losses. They just use different approaches for this purpose. 

Automated trading systems

It would be hard to discuss the benefits of trading platforms without mentioning the trading terminals that make a trader's job easier. If the trader chooses to trade on many exchanges, it is very essential.

Automated trading systems use a variety of tools in their work. These may include technical analysis, multiple trading strategies, market analysis and many others. The more complex the trading system, the more algorithms it uses, the more complex strategies it implements and the more successful trading results are. 

Algorithmic trading systems can be roughly divided into two large categories: 

  1. Trading robots.
  2. Trading platforms.

What is each of these categories? 

Trading robots

This is software that automates nearly all of a trader's activity on a bitcoin exchange. It can open and terminate trades, place take-profit and stop-loss orders, and execute a variety of other operations, saving traders time and reducing errors.

Robots may do a variety of activities depending on their sophistication. The simplest can operate on a single trading strategy. The most advanced, based on artificial intelligence, have significantly more features. For example, they can create their own trading strategy based on a trader's objectives. AI-robots may also study the market by themselves, searching through several sources, and making judgments about buying and selling crypto assets based on this data.

Such robots are most often installed on a PC or smartphone. 

Trading platforms

Like robots, the trading platform is software for automating a trader's work. However, their possibilities are much wider. 

The trading platform has various capabilities, and with the aid of traders, the work on the bitcoin exchange is nearly totally automated. One of them is the previously mentioned trading robots. However, robots in automated trading systems offer several benefits.

  1. You don't need to have programming skills to develop such a robot yourself. Trading platforms have many strategy templates that you can customize the software without the help of a specialist. 
  2. You don't need to pay for the use of the trading robot. Most platforms have a free plan that allows you to use several robots for your trading. 
  3. Robots for trading platforms are developed by the best IT-specialists. Simply put, you don't have to worry about the quality of the software you use. 

In addition to the ability to use trading robots, trading platforms have many other useful features. 

Copy trading

Another ability that automatic trading platforms have is the copy trading strategy.

The essence of copy trading is simple and is in the name of it - copying deals of professionals, as if you trade on his behalf. It works quite simply: 

  1. You create an account on the automated trading platform.  
  2. You choose the trader from an extensive list of those who are willing to provide their deals for copying. We advise you to choose the trader whose rating is the highest and whose trading results you find the most impressive. 
  3. Click the button "start copy trading".

You can always stop copy trading and end your trading session yourself. For example, if the strategy of the selected trader suddenly stopped working for you or you saw an option that would allow you to close the deal more profitably. 

User-friendly trading terminals

Speaking of the advantages of trading platforms, it is impossible not to mention trading terminals that facilitate the work of a trader. It is especially indispensable if the trader prefers to trade on several exchanges. 

Next, we explain in detail how it works. 

Let's assume that you are engaged in arbitrage trading, so the speed of switching between exchanges is principally important to you. The faster you will do it, the more chances that you will not miss a profitable moment for a transaction. 

The trading terminal allows you to connect all of the exchanges you work with to an automated trading platform and trade on them from one place. Thanks to this feature, you will not waste time switching between windows. In addition, you will use the same interface for each exchange, which will greatly facilitate your trading. 

Connecting all the exchanges you need to the trading platform is very easy. This can be done through an API.

API (Application Programming Interface) are mechanisms that allow two software components to communicate with each other using a set of definitions and protocols. 

Connection through APIs is done in a few steps and does not cause any difficulties. Every exchange and trading platform that you are going to use has detailed instructions on how to do it. 

Cryptocurrency exchanger

Almost every trading platform allows you to exchange cryptocurrency at a favorable rate. Such exchangers are reliable and accredited sources, eliminating the possibility of encountering fraudulent schemes or money laundering. 

In addition, the interface of such cryptocurrency exchangers is simple and clear, so the exchange of digital assets to other currencies does not cause difficulties. 

What is the bottom line? 

Traders can prevent human mistakes and maximize their earnings by using automated trading. Furthermore, it eliminates mundane work and eliminates the need to spend lengthy hours in front of a computer screen waiting for the optimal moment to close a sale.

When choosing automated trading software, weigh the pros and cons of each and determine whether they are suitable for your trading purposes. 

Keep in mind that automated trading relies on algorithms incorporated in trading software. Even though it is better than a person at many things, it cannot respond to market developments in real time. Control your robot's operations from time to time to avoid it from making transactions in changing market circumstances based on the previous approach. This will save you money while increasing you.


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