Automated (algorithmic) trading is not entirely new but has undoubtedly been a viral hit in the last few years in the world of trading. Automated trading software can significantly simplify the life of everyone involved in the purchase/sale of shares and other assets. For brokers, this is a chance to expand their sphere and increase their client base. Fintatech is ready to help you with this! But first, let’s talk about automated trading in more detail.
What is Worth Knowing About Automated Trading?
The primary automated trading tool is a platform or, in other words, software that allows a trader to partially or fully automate the process of buying/selling shares and other valuable assets. This is where brokerage and other companies that help traders conduct their business come into the picture. By developing the appropriate software, you can increase your business’s profits.
What Functions Can an auto Trading Platform Perform?
- Analysis and processing of information
Like any other market, the stock market has its trends and patterns. Previously, traders had to manually calculate potential probabilities and indices that indicate a particular deal’s prospects. Doing it all by yourself is very time-consuming and challenging, and the amount of information that can be calculated differs from what can be processed by artificial intelligence and a computer. Thus, by entrusting the software with analytical work, the trader saves time and significantly increases the sample of data with which he works. Thanks to this, you can make better decisions and profitable trades on time.
- Trading algorithms
Experienced traders have their secrets. Someone calls it a gut feeling, while others are sure that it is about the experience and deep understanding of the processes taking place in the markets. One way or another, many traders rely on sure signs before agreeing to a particular deal. This is also called automated trading strategies.
Automated trading tools allow you to configure the system so that the software pays attention primarily to stocks and assets that meet the specified parameters. A trader can place his offer on the exchange, setting specific parameters that the offer he wants to buy or the conditions under which he wants to sell his asset must meet. The software automatically buys/sells the assets if an offer meets the specified criteria.
- Freedom of action
As mentioned above, traders had to spend much more time processing data and selecting potentially profitable trades ten years ago. Now, having set up the software once for a certain period, a person can step away from the computer and do other things. A person needs weekends and time to sleep and rest, but the program does not, which allows you to buy and sell assets at any time, even if you are not at the computer at a particular moment.
This does not mean that auto trading software will completely buy/sell stocks on its own and a person will make a profit. Trading still requires specific knowledge and understanding of market dynamics, which is necessary to set up a platform for automatic trading successfully. Also, the trader must set the investment strategy himself. But the software can save a lot of time and energy.
What Are The Types of Algorithms?
- Systems that take into account historical data about the asset. They also analyze the market situation generally and have specific markers that influence the final decision.
- Systems that provide automatic insurance of transactions. Allows you to conduct transactions most securely.
- Systems with direct access to liquidity. Due to reduced costs, their main feature is the maximum reduction of the path to assets and markets.
- HFT trading, which focuses on the high frequency of opening orders.
What Risks Can Supporters of Automated Trading Face?
Even expert traders should not forget the risks behind any beautiful wrapper. There is power in knowledge, and this knowledge will help protect yourself — or your company — from unfavorable trades and unwanted expenses.
So what risks can those who use algorithmic trading software face?
The following risks are distinguished:
- Technical problems. Equipment designed for a smaller number of operations over a certain period may not withstand overheating and shutting down. That is why you should immediately take care of the high capacity of the equipment. An automated trading strategy is needed to implement automatic operations and combine large databases, powerful computers, and servers.
- Increased costs. This is a dangerous moment for both brokers and traders themselves. Complications and an increase in the number of operations can cost more, and both parties should prescribe specific conditions and factors that will affect the cost of certain services. Traders should set up their software to spend less than it earns.
- Reducing the accuracy of forecasts. The presence of stock trading algorithm software on the market shows that traditional factors of influence shift their weight in the overall picture of projections. As a result, the market is becoming less stable and dependent on new counts — systems engaged in auto forex trading.
There are also other risks that you and your clients may face. Therefore, your trading system should be well thought out and consider all possible risks.
Auto Trading Platform From Fintatech: What Are The Advantages
If you plan to develop stock trading algorithm software for your company, Fantatech will be happy to help you with this. We specialize in software development for brokers and traders and have extensive experience in this field.
Our main advantage is our Trading Platform Designer, with which we can develop software for your company in the shortest possible time. As a result, you will get a ready-to-use platform with all the necessary functions.
In fact, Trading Platform Designer is a set of ready-made tools and components, the foundation for future software. We can reconfigure any part specifically for the needs of your business, as well as create a mobile version and optimize the platform for different devices.
Please request a consultation for more information about developing an algorithmic trading platform. Our specialists will be happy to help you create the perfect software for your company!