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It is a fact that the markets constantly change. Methods and algorithms that used to work before, they don’t anymore. Why? Because the market participants change the very market they are participating in. And the introduction of algorithms is adding to the complexity and volatility of trading. Any inefficiency will be quickly exploited and hence diminished. On top of that we have different reactions to geopolitical events, different ways and speed of information dissemination and different trends in asset allocations.
Trading algos vs indicators
Firstly, lets differentiate between indicators and algos (in MT4 language they are called “Expert Advisors – EAs”). EAs are programs that run on MT4 and allow you to automatically trade. EAs are very powerful – if you manage to automate your trading then all you have to do is sit back and relax (!), all the trading will be done for you automatically.
With indicators, as the name suggests, a buy or sell opportunity will be highlighted and it will be up to you to “pull the trigger”. Since markets move quite fast, there will be always a lag between the time a signal is indicated and a trade executed.
Another obvious disadvantage is that you cannot sit in front of a computer all day in case a signal appears – and signals can appear in the middle of the night for forex or cryptos. It is therefore not practical to base your trading on indicators, unless your timeframes are fairly large, or you have discovered a particular characteristic that occurs at more or less a specific time.
24/7 trading & your lifestyle
Most of trading at retail level is performed by non-professional traders. People with a day job other than trading will not have the time to trade on indicators. Additionally you go on holidays go to lunch, play with your kinds, you are not in the mood, do not have your computer with you and other such hurdles. And then it comes the most annoying habit of all – sleeping! Markets are open almost 24/7 and you can only cope when you automate. You do not even have to have your computer on. You can use a VPS (virtual private server), a computer in the “cloud” that is on 24/7. It means that you can get on with your work and life without compromising performance. You have the power to control your trading, not for the trading to control you. You will freedom.
No emotions
People say that trading is a lot about psychology. Its true. Emotions like fear or joy can seriously skew your trading style. This is because emotions will influence you from not taking the right action or even worst influence on taking
the wrong action. It takes a very experienced trader to be able to cope with the stress associated with losses and professional traders usually do not trade their own money. And on the flip side, having continuous winners can make you complaisant and careless.
No programmers required
The usual process is that you come up with a trading idea, you give it to a programmer and after a few days you get your algo. If it does not work you will need to repeat the whole process. A lot of our clients come to us with an idea that they consider as unique. These ideas are usually the result of observation or the result of using a combination of indicators. There is a number of standard indicators suppied for free with MT4 and also there is a huge number of custom indicators that users can purchase. Indicators can show buy or sell signals on the screen and the users usually react to those.
So, what is the solution
If you are willing to automate your trading, you need a platform with the following characteristics:
- Does a lot of hard work fast
- It is reliable
- Allows you to create baskets of different algos so you can diversify
- Allows you to stress test algos (such as Monte-Carlo simulations)
- Does not require any programming
- It is easy to use again and again
- Allows you to adjust parameters to discover what works best
- It is broker independent but can be broken specific
For example, the Algo Builder (www.algo-builder.com) can do all that and a lot more!
And always, always remember to test any algos on a demo account.
For more information please email us at info@algo-builder.com
