FxBrokerReviews.org – Algorithmic trading or also known as Algo trading uses technology and advanced artificial intelligence to execute trades on its own. Algorithmic trading has gained popularity amongst traders, especially in instances when there are enormous numbers of trading, and you need the intervention of intelligent computer-driven trading.
These algorithms help analyze trades in the stock market, identify liquidity opportunities, cut down transaction costs, and make smart trading decisions. Moreover, artificial intelligence allows traders to control their trading processes, while helping them analyze market situations.
The feature gained instant popularity in the forex market. But back when it was launched there were only a handful of forex brokers that offered this feature. Today the market is flooded with automated trading platforms.
So how do you find the best algo trading platform? This article will cover everything you need to know about Algo trading!
Automated trading platforms in UK 2023
- E-toro – overall best Algo trading platform
- NAGA – best copy trading platform in the UK
- AvaTrade – supports the best Algo trading strategy
- IG – best for beginners
- Interactive brokers – best algo app for trading
Review of the best Algorithmic trading platform in the UK
E-toro – overall best Algo trading platform
E-toro is one of the most popular forex brokers in the UK. The platform provides the most varied portfolios in the forex market, with, futures, indices, stocks, commodities, EFTs, cryptocurrencies, and other financial instruments.
The broker is not just an algorithmic trading platform, but allows traders to Copy Trading. The copy portfolios feature of eToro enables users to build a portfolio that mimics the traders of advanced traders for free.
Not only this traders can also choose the amount that they would like to add to the portfolio and the system will automatically execute the trades required to build it.
NAGA – best copy trading platform in the UK
NAGA is a copy trading platform that allows all traders to mirror the investments of traders. The best feature of the algo trading platform is that it has an extensive process of selection of traders, who you can copy.
The automated trading platform allows users to copy the strategies of other traders and earn money from being copied by other traders. It also allows traders to learn and discuss trading strategies through NAGA Feed and NAGA Messenger.
The forex broker also supports MetaTrader 4 and 5. NAGA allows you to trade over 1,000 assets, including Forex, Stocks, CFDs, cryptocurrencies, and more.
Also read: How secure is the NAGA trading platform?
AvaTrade – supports the best Algo trading strategy
Ava Trade does not have its own Algo trading app or feature but is integrated with MT4 and MT5 which offer one of the best Algo trading strategies. To get access to the third-party platforms traders just have to login into their Ava trade account and from there they can connect their account to MT5.
A similar platform called ZuluTrade and DupliTrade is also supported by AvaTrade. It allows copying the trades of more than 10,000 traders.
The forex broker offers a wide range of financial instruments via CFDs including commodities, cryptocurrencies, stock indexes, and forex.
Also read: AvaTrade Broker Review 2022
IG – best for beginners
IG offers an algorithmic trading platform via ProRealTime and MetaTrader 4. Traders can even use IG’s API software to execute trades automatically by following a specific algorithmic trading strategy.
ProRealTime is one of the best algorithmic trading platforms. It supports multiple technical analysis tools including a trend screener (ProRealTrend) and custom indicators. Even the MT4 on IG provides free access to copy trades and provides more than 18 indicators and advanced tools.
IG also comes under the best-automated trading platform for beginners as it offers a multitude of educational resources and tutorials to learn from. The forex broker IG offers a wide range of CFDs, stocks, commodities, cryptocurrencies, indices, and more.
Interactive brokers – best algo app for trading
Interactive Brokers provides access to 150 marketplaces and is among the least expensive brokers for algorithmic trading. The forex broker allows one to buy and sell stocks, options, futures, forex, cryptocurrencies, bonds, and funds.
IBKR Lite and IBKR Pro are the two account types offered by Interactive Brokers to support algo trading. IBKP Lite has no commission charges, has a low minimum balance, and does not charge any inactivity fees. On the other hand, IBKR Pro is only available to professional traders and has no minimum balance requirements or maintenance costs.
The trading platform provides the best algo app for experienced trades as it helps to evaluate assets through a socially responsible investing (SRI) lens. moreover, The Trader Workstation (TWS) platform serves complex technical and fundamental trading tools and deep research.
What is Algorithmic trading?
We have mentioned the best algo trading platforms for you, now let us understand this feature in detail.
Algo trading refers to trading with the help of artificial intelligence software that helps you execute traders and make smart trading decisions. It uses computers, that follow a defined set of instructions that place traders to generate profits.
It is different and better than human traders as the software executes trades at a speed and frequency that is extremely fast and even impossible for a human trader. Since it is software, it completely strips out the chances of human emotions and feelings coming in the way of forex trade. Moreover, there is no need for manual intervention in algo trading, unless the trader wants to make certain changes. The algorithm monitors the live prices and graphs and places orders on its own.
Let us understand with an example :
Suppose a trader wants to
- Buy 70 shares of a stock when its 70-day moving average goes above the 200-day moving average.
- Sell shares of the stock when its 70-day moving average goes below the 200-day moving average.
Now, using these instructions, the software will automatically monitor the stock price and place the buy and sell orders when the conditions are ideal.
What are the types of Algo trading?
Different types of algorithmic trading software can be used, below we have mentioned the most popular ones:
Copy trading is one of the most common types of algo trading. They enable new traders to copy the portfolios of advanced traders and learn trading strategies. Numerous automated trading platforms practice copy trading.
A bot is a program, designed to execute trades based on the instructions set by humans. These instructions include:
- Buying and selling signals
- maximum position size and
- stop and exit price.
Bots as the name suggest removing the human touch, which serves as a benefit as it removes the psychological side of trading that often hinders the decisions of even the most experienced traders.
Alert bots are another type of algo trading offered by most of the algo trading apps and platforms. It scans the market for trading signals according to the parameters defined by the trader.
Each time the alert bot identifies a signal that matches any of the parameters, a notification is sent to the trader so he can use the information to decide on the trade. These alerts could be related to price action signals or more complex indicators such as the MACD, Relative Strength Index (RSI), and simple moving averages.
What are the advantages of Automated trading?
When compared to traditional trading methods algorithmic trading has numerous advantages. And due to these advantages, it has become a popular choice for kinds of traders. Take a look at some of the benefits of algo trading :
Fast execution speed
One of the most significant advantages of algo trading is its speed of execution. The software rapidly assesses the forex market and places or closes your trade. The speed offered by this artificial intelligence software is impossible for human traders to acquire. This benefits the most in times of market volatility where traders need to place positions swiftly.
Backtesting is a trading strategy that uses the previous trade data and compares how the trades have performed in the past and how can they be improved. The software allows traders to backtest all their previous trades and modify them according to the current market conditions.
No psychological influence
While trading in the forex market, traders are easily influenced by feelings or by the opinion of other traders. But, automated trading is completely computer-driven and therefore rules out feelings like confusion, fear, and doubt that might hamper the forex trade.
Reduced transaction costs
Since algorithmic trading has a fast execution speed and makes it possible to complete enormous transactions quickly, the costs of the transactions are significantly reduced. When several trades are carried out at the same time, the transaction costs are reduced.
With algo trading platforms in play, the participation of traders has also increased. Due to this, the liquidity of the forex market has also increased. A rise in liquidity ensures less manipulation of the market.
What are the Risks of Algorithmic trading?
The biggest drawback of algo trading is the technology. As good as technology can do, it also has its downsides. In case of a malfunction or error in the network, your trade will be interrupted causing you losses.
Also, on one hand, where human feelings can influence the trade, a lack of human touch can sometimes lead to unfavorable decisions. For example, if a trader recognizes before the order is executed that the technique would not work in the given scenario, he will be unable to cancel the program and halt the deal.
What are the best algo trading strategies?
Signal trading is a trading strategy that involves scanning and identifying trading signals that are under the parameters set by the traders. When the bot spot these signals they proceed to execute the trade. Signals can be identified by performing a technical analysis of multiple instruments or they can be taken from a third-party platform that surveys the market to spot signals and indicators.
For technical analysis signals can be derived from indicators like the price action or volume-derived indicator, the accumulation/distribution chart, Relative Strength Index (RSI), MACD, and Bollinger Bands.
Price action trading
Price action trading involves analyzing the bullish and bearish technical setups by scanning different financial instruments. The price is analyzed using complex patterns such as – head and shoulders, cup and handle, and more. In this trading strategy, you can benefit from the use of trend lines, setting up resistance levels, and price channels.
Trends and momentum following strategy
This is the popular Algo trading strategy. Under this, the trades are executed by following the momentum and trends of the market. With the help of certain technical indicators like moving averages and price level movements trades are placed in the forex market. once the momentum is determined it is compared with the historical prices.
This algo strategy includes buying a dual-listed stock at a lower price in one market and simultaneously selling it at a higher price in another market. This offers the traders a risk-free profit or arbitrage. Implementing an algorithm to identify such price differentials and placing the orders efficiently allows profitable opportunities.
Algorithmic trading has proved itself to be an easy trading method for all traders. The intelligent computer software makes smart trading decisions and executes profitable trades. Owing to all these benefits numerous forex brokers offer an algo trading app or platform to the trades.
According to our research at forex broker reviews the best algo trading platform is Naga and IG.
Q1. Is algo trading good for beginners?
Ans: Algo trading is very useful for beginners as it allows traders to copy traders and portfolios of advanced traders and learn trading strategies.
Q2. Which is the best algorithmic trading platform?
Ans: various forex brokers offer algo trading. IG and NAGA are considered to be the best algorithmic trading platforms.
Q3. Is algo trading profitable?
Ans: yes, algo trading has a lot of benefits. Fast execution, reduced transaction costs, and increased trade efficiency allow the trade to be quite profitable.