Algo Trading in 2024: Navigating the Latest Algorithms for Success



Multiple surveys and studies of the cryptocurrency market indicate that retail traders as a whole embrace automation as their main trading tool. In 2020, over 95% of all trading operations conducted by large financial institutions were made with various forms of automated trading systems. With the advancements in the AI field, we can expect that automation will soon take over trading in general and be the default method of interacting with digital assets.

Right now, over 65% of all individual retail traders use automation to at least some degree. In some markets, the share of trades conducted by automated bots reach 99%. With such a strong focus on automating everything, those not interested algorithmic trading risk falling behind the competition and into irrelevance.

Let’s talk about how to start algo trading and which are the best algo trading algorithms in 2024. Note that this article will remain relevant for several years to come as we will discuss some important trends in the trading automation industry and talk about some developments that may come sooner rather than later.

How does algo trading work?

An algorithm is a sequence of actions that must be performed according to a very specific set of instructions created by a user. In essence, any sequence can be considered an algorithm if it has a predetermined scenario which it follows. A bot is a program that simply follows instructions from its creator when triggered by a signal usually generated by a technical analysis strategy or a highly specialized signal provider.

All quantitative trading strategies in 2024 are based on complex calculations and sophisticated technical analysis methodologies, but they are still nothing more than simple algorithms performed to perfection by a computer program. What is algo trading in essence? It is simply a preprogrammed sequence that you can customize however you like.

Any automated trading system that individual users can build today is based on three core components:

  • A source of trading signals. Any algorithm must be kicked into action by a trigger. Trading signals are such triggers. They can be generated by a technical analysis strategy deployed on the TradingView platform or any other trading terminal. With good educational materials and some dedication, you can learn how to produce trading signals.
  •  An automation platform or software. Robots will perform actions written in their code, but you need a place where to write it down. An automation vendor like WunderTrading or a specialized desktop application can do the job. Modern retail traders tend to use dedicated providers more often as locally operated soft can be unreliable and buggy.
  • A centralized exchange. Many CEX platforms have APIs allowing third-party providers to seamlessly connect and place orders on behalf of users while bypassing the GUI. DeFi exchanges do not allow any API connections, but you need the speed and reliability of centralized trading environments in any case.

Algorithmic trading strategies allow users to build systems for passive income trading even without any prior experience with financial markets and automation. For example, you can easily run a fully autonomous GRID system that will generate relatively low profits with an impressive level of consistency.

Some of the most important trends in algo trading

Artificial intelligence has been one of the hottest topics in the tech world for a while now. Expert AI systems can be applied well to any area where pattern recognition is important. Technical analysis is all about pattern searching which is something that an expert AI can do very well. Multiple automation providers experiment with implementing AI into their products and employing machine learning to improve some of their existing offerings.

For example, WunderTrading has a new exciting product. The AI-assisted statistical arbitrage bot is capable of managing a large portfolio of market positions while adjusting them in real-time according to its own understanding of the market and its dynamics. Exact yields and long-term performance are still something experts debate, but the very existence of such products is promising.

At the same time, several companies are trying to employ AI to improve their other products like GRID and DCA bots to make them more reactive and efficient.

Another important trend that we are seeing is that many retail traders decide to base their portfolios on products that can be found in the automation industry. While many experienced investors believe that diversifying investments and spreading them across several asset classes, but contemporary crypto enthusiasts and retail traders in the market believe that it is possible to create a balanced portfolio full of automation products.

Here are some examples of diversifying with automated trading systems:

  • Use copy trading to manage risks. You can find a good retail trader with a risk style that suits your preferences and can be counterbalanced by copying operations of traders with higher profitability but also more aggressive approaches. It is possible to identify good combinations of risks and rewards copying traders with different risk profiles.
  • Focus on protecting your riskier market positions with safer products. For example, you can use GRID bots with safe delayed orders to generate smaller profits with consistency to protect market positions that seem to be shaky. DCA buying to accumulate assets is also a good approach to use if you are interested in hedging some positions with long-term holdings.
  • Use complex algorithms. It is a good idea to look in the direction of high frequency trading in 2024. Multidimensional approaches like statistical arbitrage or AI-assisted statistical arbitrage can be quite efficient and safe. You may use these systems to hedge against risks associated with proactive trading bots that run on aggressive technical analysis strategies.

In general, the community of crypto investors is quite interested in using advanced automated trading systems of varying risk styles. If you want to run an efficient crypto trading bot and make profits consistently, we recommend following the latest trends and try to invest in promising products like AI-driven algorithms and GRID bots.

What are the advantages of algorithmic trading?

With many distinct and apparent trends indicating that more and more people will be using automation to conduct their trading activities. Despite these apparent signs of what will come soon, millions of retail traders remain unconvinced that robots will be something so prevalent and important in the nearest future.

To make the conversation slightly more favored toward algo trading by listing some advantages that users of algo trading enjoy:

  • Reliable risk management. One of the biggest reasons many people decide to focus on using automation is that managing risks becomes a little bit less complicated. For example, you will never forget to use delayed orders (stop loss and take profit). All position sizes are predetermined by settings and you cannot trade with more than you decide to dedicate to algo trading.
  • Robots do not succumb to emotions. The psychology of a retail trader is often the biggest factor affecting their outcomes in the long run. You must remain focused and emotionless while following strict rules regardless of what is happening right now with your portfolio or the market. People make mistakes due to stress, fear, anger, and doubt. Machines simply follow their instructions and never falter.
  • An automated trading system can work around the clock. The crypto market never pauses. If you are running a high-frequency trading system or rely on intraday operations, being able to trade digital assets at all times is quite important since retail traders in Japan often show reach peak activity when people in the US go to sleep. Robots do not need to sleep, rest, or take pauses for any physiological process unlike humans.
  • Automation is affordable. Many automation vendors offer flexible pricing allowing users to account for any expenses related to running an automated trading system. Since running many contemporary trading systems is often a game of inches, being able to cut down on expenses is quite important and can make a huge difference.

Algo trading success tips for newcomers

Algorithmic trading can be very successful and profitable if you know your technical analysis and risk management. However, it is still possible to miss the success by a large margin despite doing everything correctly. We want to give you several expert tips that will help you avoid many pitfalls awaiting those who want to run an algorithmic trading system.

Some advice for starters:

  • Do not overcomplicate things. Building efficient trading bots is a skill that requires honing over time. Using sophisticated approaches like quantitative analysis and multilevel statistical arbitrage systems is not the best idea for newcomers. Start with simpler technical analysis strategies like Bollinger Bands Breakouts or trend trading with MACD to trigger GRID and DCA bots.
  • Focus on mastering the basics. We strongly suggest iterating as often as possible. Build bots one after another and test hem using paper trading features from companies like WunderTrading. Do not forget that you can run bots on demo accounts and test various ideas before applying them to the real market. Focusing on reiterating strategies until you find something that works consistently is a good way to practice and cover your bases.
  • Always use delayed orders. For some reason, many retail traders avoid using stop loss and take profit orders hoping to liquidate dangerous positions in time or secure bigger profits. It is a necessary step to success to use these delayed orders to protect your market positions and learn how to set realistic profitability goals.
  • Limit the portion of the portfolio dedicated to algo trading and various forms of automation in general. Understanding the limits of your capital and limiting access to your funds for automated trading systems are both quite important things to do if you want to create a good bot that will perform well in the long run. We suggest limiting your bots to just 2% — 5% of your portfolio each to avoid unnecessary exposure of your capital to risks.
  • Work with companies that deliver a good product. The automation industry is saturated with offer. You will find many providers that have similar product lineups. However, some provider better services than others. It is important to carefully choose automation vendors and work with platforms that provide the necessary variety in products and pricing options to allow their users to thrive!

Choosing the best automated trading platform

There are several important factors to consider when choosing an automation provider for your algo trading needs. Here are some of them:

  • Work with platforms with a good UI. If you feel confused or uncomfortable navigating the menu and building bots, you won’t be efficient at creating successful automated systems. Choose providers that offer excellent user experience and convenient products.
  • Be mindful of pricing. Despite many companies offering competitive prices, many limit their customers and do not provide flexible payment plans and diverse product packages. Pick companies that have tiered paid plans and offer discounts.
  • Variety is important. It is a good idea to have an option to choose a good product for specific goals. Pick platforms where you can run GRID and DCA bots, engage in copy trading and work with advanced AI-assisted statistical arbitrage systems to both diversify and experiment with investing.

Algo trading is very efficient and fast which can be crucial for the long-term success of your investments in the rapidly evolving and dynamically changing crypto market.


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