Automated Trading

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Published: June 19th, 2020 by Andrew

Does Automated Trading really work? For beginner traders this is almost a fixed idea: make easy money thanks to trading without doing anything, hoping for the miracles of automated trading.

Usually, those who think they can get rich in this way end up in the hands of some scammer: easy money does not exist and it is usually the scammers who promise easy and effortless money.

Automated trading works, it generates profits for those who use it properly, but it is not a way to make easy money and it takes, in any case, effort and commitment to obtain positive results.

In this guide we explain how to trade automatically, what are the benefits and what are the risks (because unfortunately, like standard online trading, there are also risks). Finally, we will also talk about one of the few automated trading platforms that really works, it is accessible to everyone, even beginner traders: eToro (click here to start with eToro). Among other things, it is also the only automated trading platform that is also completely free.

What is Automated Trading

Many beginners would like to trade automatically, but they don’t even know what it is. Many think that it is synonymous with algorithmic trading, but it is not so. Algorithmic trading is only one possible form of automated trading, but not the only one.

We can define Automated Trading as any system that performs operations on behalf of the trader without the trader having to directly enter “buy” or “sell” orders (a bit like an Expert Advisor). Warning: this absolutely does not mean that the trader does not have to do anything…

The Trader must always do something, at least a little action. One of the greatest Italian algorithmic trading experts once said that the trader must always do something, at least clicking on the “start” button to start the robot.

In practice, an algorithmic trading system is a procedure that buys or sells on the markets and generates (possibly) profits for the trader. There are two major categories of automated trading systems:

  • Algorithmic trading systems (Trading Robots)
  • Copytrading systems (Social Trading)

Trading Robots

Trading Robots are algorithmic trading systems. In practice, they are computer programs that perform operations on financial markets, following a precise algorithm, that can be encoded in a specific programming language. For example, there is a programming language that allows you to code robots that work with the famous Metatrader (MQL) platform.

Do trading robots work? It all depends on who programmed the robot: if the programmer knows the markets and is a good trader, then the robot is very likely to work. It is important that whoever programs the robot is also an expert in the specific language and general principles of programming.

Actually, it is very difficult to create a robot that really works and the good developers of algorithmic trading systems can be counted on the fingers of one hand.

What about all the robots that are sold on the internet? Unfortunately, most of the trading robots that are sold on the internet, often with intense advertising campaigns, are not developed by trading experts, but by marketing experts. These people manage to make a lot of money by selling their robot to the most naive beginner traders who hope to achieve high profits, but then realize that they lost money.

The basic problem is that when you use these (useless) robots, you not only spend a lot of money on the purchase, but then, when you have to use them with real money, you will lose other money because they lose money (yours!). The positive news is that in many cases these robots, once installed on Metatrader (or any other trading platform) do not even start: at least you don’t lose money!

In general, those who are so good at creating trading robots that really work, accumulate big fortunes because they can scale their skills and move very high volumes. Precisely for this reason, these people do not absolutely need to earn few pennies by selling trading robots on internet with aggressive marketing techniques.

The best option for those who want to trade automatically with robots is to learn to program in MQL (or some other similar programming language). Obviously, you need to know trading in depth: an automatic trading robot, after all, is the coding in a formal language of the knowledge of trading of those who create it. If a beginner creates a robot, he will most likely develop a system to lose money automatically.

Copytrading Systems

Is there an alternative, instead of robots, that works for algorithmic trading? In this paragraph, we talk about Copytrading, a technique that has developed in recent years and that could provide good results even for novice traders.

Warning: before continuing it is good to remember, once again, that easy money does not exist. All methods of trading still require effort and time. Those who don’t want to commit, should simply stay away from trading.

That said, let’s go back to Copytrading, it is a method that allow you to make profits with trading by copying other traders.

Does it work? It depends on two factors: first of all, you need a trading platform that is capable of working perfectly, safe, reliable and fast in replicating operations.

Secondly, it all depends on who you copy. If you do copy trading by copying a born loser you will lose your money as well.

The best Copytrading platform available today is eToro. It is one of the most famous platforms for online trading at European level, very safe, reliable and commission-free.

eToro’s Copytrading system really works: it allows you to easily select traders to copy thanks to a very efficient internal search engine. Once you selected the traders you would like to copy, the automatic platform will replicate the operations of these traders in your account.

The platform is completely free and does not charge commissions. You can sign up for free at eToro by clicking here.

It is important to note that, at least do date, the only Copytrading that really works is eToro. There are other platforms that claim to have Copytrading systems (or Social Trading) but at the moment, we are not aware that those systems are able to generate profits for traders.

eToro: how it works

eToro is very simple, even a beginner can use it without problems. We can say that eToro is, simultaneously, many things:

  • A trading platform
  • A social network
  • An automatic trading system

Those who sign up for free on eToro have the opportunity to operate directly on all the main financial markets: buy shares, currencies, cryptocurrencies, commodities. eToro does not charge commissions, it is completely free and has really favorable spreads for the trader.

eToro is also a Social Network: all traders can have a public profile (if they want obviously) where they can publish their opinions on the financial markets. In practice, eToro is the largest and most reliable social network of investors in the World. As long as the traders agree, trader profiles can also contain the net profit made in the past and the level of risk associated with that trader.

Finally, as we said, eToro is also an automatic trading system. It is possible to copy all the trades of a trader, in real time, starting with a simple click.

Indeed, many beginners operate on eToro selecting, with the internal search engine, the traders who have gained more in the past and obtaining a double advantage: they can earn immediately, without waiting, to gain experience and they can study online trading just by observing what great traders do.

After all, just a simple registration (you can register by clicking here) to start working with eToro copy trading and you can also do it in demo mode, therefore without investing real money. Many traders work with the eToro demo to verify that automatic trading really works, before starting to trade with real money.

Read also our full review on eToro

Automated Trading MT4

One of the alternatives for automatic trading is offered by the Metatrader 4 platform. This platform provides a real programming language (MQL) that allows you to create automatic trading robots.

Do the robots of Metatrader 4 work? Yes, as long as they are programmed well. Whoever creates a robot of this type must be perfectly familiar with the programming language and, at the same time, must also be a great market expert.

A robot for Metatrader 4 can be useful for not having to spend the whole day in front of the monitor. Many beginners dream of solving all their problems by purchasing some robots for Metatrader 4. They usually end up in the hands of some scammer who trims them with a patch that doesn’t work or even makes you lose money.

For beginners it is much better to use eToro or some trading signals service that are not 100% automatic, but they can help achieve the same purpose (to make money even without being a trading expert).

Bitcoin Automated Trading

Since 2017, Bitcoin has become popular with the general public. During the last months of 2017, in fact, trading Bitcoin became almost fashionable and hundreds of traders managed to make a lot of money, until the continuous collapse of the cryptocurrency during 2018.

Those who obviously made the right perditions about Bitcoin also gained with the crash.

That’s why beginners are often looking for ways to trade Bitcoin automatically or to automatically make money with cryptocurrencies. In most cases, they end up in the hands of scammers (such as Bitcoin Code), systems that promise automatic earnings but that in reality make you lose every penny.

For those interested in Bitcoin automated trading the only solution that really works is, once again, the one offered by eToro.

In any case, it is good to make clear a fundamental concept: Bitcoin trading is not a way to make easy money and the websites that say Bitcoin is an easy way to earn automatically are scams (often just disguised Ponzi schemes from trading systems).

Conclusions

Automated Trading could be a solution for those who are beginners and therefore do not know anything about technical analysis (maybe they have never heard of CSR or Mobile Media) and fundamental analysis, or not those who do not have time to operate on the financial markets in first person.

Unfortunately, most of the automatic trading systems available do not work or work badly.

One of the very few automatic trading systems that really works is the eToro platform: unlike what you usually think, there is no artificial intelligence underneath.

eToro’s software simply takes care of replicating the trading operations made by the best investors (those who have made the most gains in the past with the least risk).

If you want to register on eToro you can visit the home page here
What is automated trading?

This is the possibility of investing through robots or through “copy” systems of the operations launched by others, as in the case of eToro Copy Trading.

Is there an Expert Advisor (EA)?

It is an automatic robot that must be programmed in order to operate on the markets.

What is the most used automatic trading mode?

In Europe, it is the Copy Trading of eToro, with over 500,000 active users.

Is automatic trading worthwhile?

It depends on the trader’s skill in correctly programming Expert Advisors. Generally speaking, the world of Trading is increasingly moving towards an automatic rather than a discretionary method.

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