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What is an algotrading? Is it better than manual trade?

What is an algotrading? Is it better than manual trade? Johannes Röll Visitors: 405 ★★★★


What is it?

Simply speaking, the algotrading means that you will create the trading system, will test, having convinced that it makes profit, and further it will automatically work, with all your settings. Everything that you need to do is to check how everything functions.


The algotrading purpose - precisely to execute signals of your trade strategy. This mechanical trading system is called still by the adviser, but as everything works on your algorithm, the word "algotrading" as on me, approaches much better.


Has to notice that this system can be not only mechanical, but also manual - as you want.


Global essence of an algotrading is selection of necessary rules for trade. It can be done manually, it is possible and automatically or genetically, having trusted in the computer which will invent rules.


You have to understand that the algotrading has nothing in common with prediction about what could read floating around the Internet earlier.


How does it work?

At first, as we already spoke, the trader develops the mechanical trading system. After - tests it historically, counts profitability level. Further, if it accepts indicators, testing continues with use of the minimum deposit or on a demo account.


Algorithms differ from each other in certain parameters - indicators which force the robot to begin work or to stop it at some point. 


Algorithms of trade strategies write, using a programming language and further carry out check historically further to use them to create input and output signals in the special program of a technical expertize.


Really to earn on the Robot on Forex, you will need to penetrate into the system of their work seriously. Otherwise as you will be able to distinguish garbage from the robot who can quite make profit?


Manual trade is worse than advisers?

Manual trade has minuses:


1) Some traders (especially beginners) badly understand the market.


Only having become on a trading track, many beginners begin to stuff the head with infinite number of the books written generally people who had no real experience of trade on Forex at all. Such author will not be able to bring benefit to the beginning trader, and even on the contrary - can mislead and make the first experience in trade awful at all. Big money is quite so lost by beginners.


2) Emotions, psychological state of the trader very strongly affect trade. Thus, being in an unstable state, the person can lose money even on good bargain.


3) Sometimes the person is purely physically not able to trade. He can be tired or sick, for example.


4) An indistinct system which is present at creation of any strategy. The trader - the living person, identity. And the quality of strategy directly depends on this identity.


Algotrading pluses

The human factor does not disturb, robots do not panic, passion or excessive enthusiasm.


The technical analysis of the market allows the trader to save money which it, perhaps, would spend for the analysis of the market.


The robot unambiguously works much quicker than the person, and can make a set of trade actions at the same time. He also uses a large number of trade tools at once that the trader cannot do.


The robot does not make mistakes (if there is no mistake in the code). Whereas the trader, owing to a human factor, can be mistaken in calculation or during drawing of the application.


The functionality of the trade strategy, at will, can be expanded, having only added the code.


Algotrading minuses

Algorithms - it is not so simple. If in an algorithm there is any mistake - the robot will continue to operate by his principle, and, so you can lose money if the transaction was unprofitable.


The shortage of the training materials on an algotrading - essential minus. It is not so easy to find the good mentor and to be able to filter information on the Internet, it is necessary to be informed on a subject at least at the average level. The standing literature on the subject discussed by us is not enough.


First of all, you have to understand that nobody for you will trade. The robot will work only on your installations, and, so you anyway need to study the market, to learn to trade. Remember that the algotrading does not save you from responsibility during trade.


Johannes Röll
Johannes Röll

Johannes Röll was born 1978 in Brilon,Germany. Graduated RWTH Aachen University. Over the past ten years he worked as Head of the plastic card team, where he was mainly responsible for the development of the distribution, Head of sales Department and Financial Analyst,where he got experience in planning and support sales figures for branches. For the present he works as freelancer

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