Automated Trading

Automated trading systems execute positions based on predetermined entry and exit positions. Today, over 75% of stocks traded on US exchanges originate from automated orders. This software-based approach to trading is also known as mechanical investing or algorithmic trading. Our guide to automated trading software explains how it works and tips for getting started. We also list the best brokers that facilitate automated trading in 2023.

Best Automated Trading Brokers

  1. OANDA offers 70 forex pairs with two competitive pricing models and a substantial welcome deposit bonus

    Automation

    EAs

    OANDA Corporation is regulated by the CFTC/NFA. OANDA is a member Firm of the NFA (Member ID: 0325821). CFDs are not available to residents in the United States.

    Instruments
    Forex
    Regulator
    CFTC, NFA
    Platforms
    MT4
    Min. Deposit
    $0
    Min. Trade
    $0
    Leverage
    1:30 EU, 1:200 Global
  2. Forex.com boast a global reputation. Regulated in the UK, EU, US and Canada they offer a huge range of markets, not just forex, and offer tight spreads on a cutting edge platform.

    Automation

    Automated trading supported through platforms (MT4)

    Instruments
    CFD, Forex, Stocks, Crypto, Futures, Options, Commodities
    Regulator
    CySEC, IIROC, NFA, CFTC, FCA, CIMA
    Platforms
    MT4
    Min. Deposit
    $100
    Min. Trade
    $1
    Leverage
    1:200
  3. NinjaTrader offer investors futures and forex trading. Use auto-trade algorithmic strategies and configure your own platform while trading with the lowest costs.

    Automation

    Yes

    Instruments
    Forex, Stocks, Crypto, Futures, Options, Commodities
    Regulator
    NFA, CFTC
    Platforms
    Own
    Min. Deposit
    $50
    Min. Trade
    Varies by asset
    Leverage
    -
  4. The leading US trading Exchange. Nadex offer genuine exchange trading to global clients on Binary Options. Fully regulated by the CFTC.

    Automation

    Yes

    Instruments
    Binary Options, Knock Outs™, Call Spreads
    Regulator
    CFTC
    Platforms
    Own
    Min. Deposit
    $250
    Min. Trade
    $1
    Leverage
    -
  5. IG-US offer spread betting, CFD and Forex trading across a range of markets. They are FCA regulated, boast a great trading app and have over 47 year track record of excellence.

    Automation

    Yes

    Forex trading involves risk. Losses can exceed deposits

    Instruments
    Forex, ETFs, CFDs, indices, shares, commodities, cryptocurrencies, options, futures, spread betting
    Regulator
    FCA, ASIC, MAS, FSCA, JFSA, FMA, CFTC, NFA, BMA, DFSA, FINMA, BaFin
    Platforms
    MT4
    Min. Deposit
    £250
    Min. Trade
    0.1 lots
    Leverage
    1:30
  6. Pocket Option is a global binary options broker with a sleek proprietary trading platform and competitive range of assets.

    Automation

    Yes

    Instruments
    Binary Options, Currencies, Commodities, Stocks, Indices
    Regulator
    IFMRRC
    Platforms
    MT5
    Min. Deposit
    $50
    Min. Trade
    $1
    Leverage
    -
  7. Trading in the Uphold environment offers a one-stop-shop for all your crypto requirements.

    Automation

    Yes

    Instruments
    Cryptos, Precious Metals, US Stocks, Environmental Assets
    Regulator
    FCA, FinCEN
    Platforms
    Own
    Min. Deposit
    $0
    Min. Trade
    $1
    Leverage
    -
  8. M1 Finance offers customizable and automated trading services for US investors.

    Automation

    Yes

    Instruments
    Stocks, ETFs, OTC stocks
    Regulator
    FINRA, SEC
    Platforms
    Own
    Min. Deposit
    $100 ($500 for IRA)
    Min. Trade
    $1
    Leverage
    -
  9. Kwakol offers trading on the MT4 & MT5 platforms with high leverage & copy trading.

    Automation

    EAs

    Instruments
    CFDs, Stocks, Indices, Commodities, Forex, Cryptos
    Regulator
    ASIC, FINTRAC
    Platforms
    MT4, MT5
    Min. Deposit
    $1
    Min. Trade
    0.01 Lots
    Leverage
    1:1000
  10. ForexChief is a foreign exchange and CFD broker with offshore regulation and access to both MT4 and MT5 trading platforms.

    Automation

    EAs

    Instruments
    CFDs, Forex, Metals, Commodities, Stocks, Indices
    Regulator
    VFSC
    Platforms
    MT4, MT5
    Min. Deposit
    $10
    Min. Trade
    0.01 lots
    Leverage
    1:1000
  11. Videforex accepts deposits in a range of cryptos and fiat currencies. Payouts reach 98% per trade.

    Automation

    Yes

    Instruments
    Binary Options, CFDs, Forex, Commodities, Indices, Cryptos
    Regulator
    -
    Platforms
    Own
    Min. Deposit
    $250
    Min. Trade
    $1
    Leverage
    1:500
  12. Empower is a robo-advisor platform with a suite of free financial planning tools.

    Automation

    Yes (Auto Portfolios)

    Instruments
    Stocks, ETFs, Mutual Funds, Fixed Income
    Regulator
    SEC, FINRA
    Platforms
    Own
    Min. Deposit
    $1 (Cash), $100,000 (Robo Advisor)
    Min. Trade
    Variable
    Leverage
    -
  13. Personal Capital is a leading US investment management provider with a range of financial tools. The broker-dealer has 3.4 million active users and is SEC-regulated.

    Automation

    Yes (Auto Portfolios)

    Instruments
    Stocks, ETFs, Mutual Funds, Fixed Income
    Regulator
    SEC
    Platforms
    Own
    Min. Deposit
    $1 (Cash), $100,000 (Robo Advisor)
    Min. Trade
    Variable
    Leverage
    -
  14. Kraken is a top-rated cryptocurrency trading exchange offering the largest tokens and altcoins by market cap.

    Automation

    Kraken Futures is integrated in other platforms which have bots: Bookmap, Caspian, FMZ Quant, Gunbot, HaasOnline, Hyndor, Margin

    Instruments
    Cryptos
    Regulator
    FCA, FinCEN, FINTRAC, AUSTRAC, FSA
    Platforms
    AlgoTrader
    Min. Deposit
    $10
    Min. Trade
    Varies upon the crypto traded
    Leverage
    -
  15. Pionex is a cryptocurrency exchange with impressive automated trading tools and bots.

    Automation

    Crypto bots

    Instruments
    Cryptos
    Regulator
    FinCEN
    Platforms
    Own
    Min. Deposit
    $0
    Min. Trade
    0.1 USDT
    Leverage
    -
  16. eToro is a social investing platform that offers stocks, ETFs, options, and crypto. eToro securities trading is offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC. Cryptocurrency is offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. https://www.daytrading.com/ is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD. eToro is not a tax advisor. Please contact a tax professional.

    Automation

    Copy multiple traders simultaneously with the flexibility to pause and stop. Crypto only.

    Instruments
    Stocks, Options, Cryptos, ETFs
    Regulator
    eToro USA Securities Inc (“eToro”) - SEC, FINRA
    Platforms
    Own
    Min. Deposit
    $10
    Min. Trade
    $10
    Leverage
    -
  17. Coinexx is an ECN broker with 1:500 leverage, 80+ instruments and a joining bonus.

    Automation

    EAs

    Instruments
    Forex, Commodities, Indices, Cryptocurrencies
    Regulator
    -
    Platforms
    MT4, MT5
    Min. Deposit
    0.001 BTC
    Min. Trade
    0.01 Lots
    Leverage
    1:500
  18. World Forex offers commission-free trading with a $1 minimum deposit and 1:1000 leverage. Digital contracts are also available, offering beginners a straightforward way to speculate on popular financial markets.

    Automation

    Yes

    Instruments
    Forex, CFD Stocks, Metals, Energies, Cryptos, Digital Contracts
    Regulator
    SVGFSA
    Platforms
    MT4, MT5
    Min. Deposit
    $1
    Min. Trade
    0.01 Lots
    Leverage
    1:1000
  19. Deposit and trade with a Bitcoin funded account. BinaryCent offers binary options, FX and CFD trading. 1:100 leverage is also available.

    Automation

    Centobot for binary options

    Instruments
    CFD, Forex, Stocks, Crypto, Options, Commodities
    Regulator
    VFSC
    Platforms
    Own
    Min. Deposit
    $250
    Min. Trade
    $.10
    Leverage
    1:100
  20. Zacks Trade is a US based brokerage, built for the active trader. Trade stocks, ETFs, bonds, mutual funds and more on a proprietary trading platform.

    Automation

    Yes (algos)

    Instruments
    Stocks, Crypto, Options
    Regulator
    FINRA
    Platforms
    Own
    Min. Deposit
    $2500
    Min. Trade
    $3
    Leverage
    -
  21. One of the largest discount brokers in the US, with a fixed trading commission and access to a large array of trading products and securities.

    Automation

    Yes - Auto trading available via bots

    Instruments
    Forex, Stocks, Crypto, Futures, Options, Commodities
    Regulator
    SEC, FINRA, CFTC
    Platforms
    Own
    Min. Deposit
    $0
    Min. Trade
    None
    Leverage
    -
  22. Just2Trade offer high tech trading on stocks and options with some of the lowest prices in the industry.

    Automation

    Yes - Lime Financial

    Instruments
    Stocks, ADRs, ETFs, futures, options, commodities, bonds
    Regulator
    CySEC, NFA, FINRA, Bank of Russia
    Platforms
    MT4, MT5
    Min. Deposit
    $100
    Min. Trade
    0.01
    Leverage
    1:5 to 1:20
  23. InstaForex is a CFD broker providing access to forex, stocks, cryptocurrencies, commodities, energies, indices, and more. With competitive fees and a huge range of available assets, the brand offers safe and reliable trading.

    Automation

    Yes

    Instruments
    Forex, shares, indices, metals, oil and gas, futures, cryptos, binary options
    Regulator
    BVI FSC
    Platforms
    MT4, MT5
    Min. Deposit
    $/€1
    Min. Trade
    0.01 Lots
    Leverage
    1:1000

Automated Trading Explained

Automated trading is a strategy that utilizes a program to execute trades according to a set of predetermined rules. A trader will set limits, such as guaranteed stop and loss orders, using technical analysis and advanced tools.

Depending on the strategy, entry and exit rules can be rooted in straightforward conditions, such as moving average crossovers. Alternatively, they can be built on more complex indicators and requirements.

Once the rules are programmed, automated trading systems monitor the markets, deciding whether to buy or sell according to the inputted rules. Algorithms essentially follow trends and execute positions accordingly. Some systems even integrate news feeds and adjust their approach according to key headlines and announcements.

Once a trade is entered, orders for protective stop losses, trailing stops and profit targets will all be automatically generated. Importantly, if you are in a fast moving market, instantaneous order entry could be the difference between a tiny loss and a significant cost.

Automated trading services can be applied to a range of asset classes including forex, stocks, cryptocurrency, futures and options. Automated trading platforms are also available to traders worldwide, from the UK to the US and all major global exchanges accept automated strategies, including the NYSE and LSE.

Automated trading platform reviews
Automated trading on MT4

Pros & Cons

For the right trader, automated trading strategies offer speed, flexibility and consistency.

Advantages

  • Removes emotion – one of the biggest benefits of automated trading algorithms is the fact they remove rash decision making. Some day traders will buy and sell fuelled by emotion which can often lead to errors. Automated trading systems, on the other hand, will execute positions as soon as the specified rules have been met. No emotion, just logic.
  • Backtesting ability – most automated systems will allow you to test your rules and strategy against historical data to see their likelihood of success. This lets you hone a strategy and iron out any issues before putting real money on the line. It also allows traders to determine the system’s expectancy (the amount you can expect to win or lose).
  • Speed – automated software offers enhanced order speed entry. The best programs are capable of adapting to market conditions and generating orders the moment trade criteria are met. In the day trading game, in particular, just a few seconds can make a significant difference to potential returns.
  • Diversity – automated trading systems allow you to increase your hand by using multiple accounts and any number of strategies at the same time. This enables you to spread risk over different instruments whilst still hedging against losing positions.
  • Time – whilst we would still recommend consistent monitoring, automatic strategies do not need to be as closely monitored as manual trading approaches. Once your limits are set, the robot and platform does the work so you have more time for analysis or to set up additional trades.

Disadvantages

Of course, automated trading won’t be right for every investor. With that in mind, automated approaches are worth comparing vs manual investing to see which best suits your trading style.

Below we’ve listed some of the key limitations.

  • Over-optimisation – a focus on curve-fitting leads to automated trading algorithms often falling short when it comes to live trading. For example, a lot of investors fine tune a plan with almost 100% profitable trades that don’t ever experience a drawdown. Apply it to a live market, however, and it can completely fail. This is why we recommend sticking with low value trades until you’ve ironed out any problems.
  • False trends – even the best automated trading software can trigger false trends. As price reacts to unfolding developments a false trend can spiral. This was demonstrated in August 2012 by the Knight Capital group; who lost over $440 million in just half an hour when their trading software went rogue in response to market conditions.
  • Monitoring – investors mistakenly think that once they have formulated automated trading strategies, they can sit back and let the computer do the heavy lifting. Unfortunately, it is not quite that simple. Be wary of computer crashes, connectivity issues, unforeseeable market anomalies, as well as missing or duplicated orders.

Getting Started

Most traders will opt to work with a third-party platform, though there is also the option to set up your own automated system (more on that later).

Firstly then, you will need to find an automated trading platform. NinjaTrader and Interactive Brokers are particularly popular systems but do your own research to find a platform that offers all the features you need. For example, if you want to trade on the MT4 platform, NinjaTrader is not for you because it uses CQC Continuum. Also not all popular platforms support automated trading, TradingView for example, does not.

Below are some of the most popular ready-made automated systems available in the market today:

One you have signed up with a provider, you can set trading parameters. Custom algorithms will then apply the criteria to execute trades on your behalf.

But it does not, or should not, stop there. Successful automated traders consistently monitor their positions. Complacency leads to losses. Automated systems, like any machine or technology, are still liable to glitches or other technical issues.

Best automated day trading software
Automated trading on MetaTrader 4

Copy Trading

At the most basic level, copy trading is a simplified form of automated trading. It allows you to copy the trades of another investor. So after reviewing past performance and specific trade details, you can ‘follow’ a trader, (or better, a group of traders).

As master traders open and close trades, you will see those positions replicated in your own trading account. You can, however, adjust how much to invest, so someone with $100 can still follow the trades of someone making $1m trades.

Importantly, copy trading removes the live decision making process. All levels and order parameters are predetermined. You still need to select the traders to copy, but all other trading decisions are made by the investor you follow.

Copy trading is perhaps the most hands-off approach to automated trading.

Brokers Offering Copy Trading

  1. Pocket Option is a global binary options broker with a sleek proprietary trading platform and competitive range of assets.

  2. IQCent is an offshore binary options and CFD broker with 10+ payment methods and a $250 minimum deposit. Clients benefit from copy trading tools and in-depth market analysis.

  3. Videforex accepts deposits in a range of cryptos and fiat currencies. Payouts reach 98% per trade.

Developing Your Own Software

If you are unable to find commercially available software that provides you with the functions you need, then another option is building an automated trading system yourself. Doing so is easier than ever before thanks to code editing tools such as VIM and online marketplaces that make it easy to find freelancers with the relevant skills.

Developing your own software brings with it several pros and cons:

Benefits

  • Complete control over how the software works, looks and feels
  • Allows you to build complex, niche trading strategies for particular markets or assets, such as Bitcoin
  • You can optimize the program to work faster than commercial software by including only the features you need

Risks

  • Expensive if you do not know how to do it yourself. Like most construction projects the final cost usually ends up being higher than initial estimates.
  • The software will be untested and is almost certain to contain bugs. Commercial software will likely have gone through thousands of hours of testing and will be used by thousands of traders, exposing potential problems.
  • Your software might perform in unforeseen ways. Even big commercial operations have had issues with trading robots that carry out surprising trades or are triggered by other robots’ actions to commit large sell-offs.

Automated trading with nadex and matlab

We would recommend making sure that software available on the market does not meet your needs before you start developing your own.

If you do choose to build your own, there are two main ways: writing the code yourself or hiring a freelancer:

Programming Software Yourself

Designing your own trading software requires a basic understanding of programming as well as knowledge about how to code a trading algorithm. Software packages will help make the process easier, but all of them require a basic programming knowledge.

For knowledgeable coders one of the best editors for building your automated trading bot is Vim.

Vim is a universal text editor specifically designed to make it easy to develop your own software. It was created by Bram Moolenaar in 1991 and is based on Bill Joy’s vi text editor. It is “charityware” meaning that all its proceeds are used to help children in Uganda. Importantly, Vim makes it easy to create and edit software.

Vim is also a command-based editor – you use text commands, not menus, to activate different functions. The command-based interface allows the software to have a lightweight clean interface while still offering an extensive selection of features. The platform is suitable for both novice and experienced developers alike.

Vim’s popularity can in part be attributed to its ease of use. The tools offered make it easy to overview your code and find bugs before they cause any problems. It can also be customized to handle hundreds of programming languages and supports numerous plugins for additional features.

Hiring A Freelancer

Of course, there is always the option to hire a freelance developer.

If you choose to go down this route, make sure to hire a skilled developer that can develop functioning, stable software. Do not try to get it done as cheaply as possible. Good trading software is worth its weight in gold. A poorly designed bot can end up being expensive in the long run.

It is essential that you provide the developer with a detailed description of exactly what you expect from the trading software. Include all desired functions in the task description.

We recommend the MetaTrader Marketplace for finding potential developers. There is a long list of experienced programmers who sell their services, with developers for every budget.

APIs

If you chose to develop the software yourself then you are free to create it almost any way you want. Your freedom will, however, be restricted by the API (Application Programming Interface) provided by your trading platform.

The API is what allows your software to communicate with the trading platform to place orders. Your software will only be able to make trades that are supported by the third-party platform’s API.  If a particular feature is crucial then you need to choose a platform with an API that offers that function.

Your bot will also have to import market data in some way, and in real-time without delays to effectively respond to markets. With that said, if trading decisions are based more on fundamental factors and rely on just waiting for the ‘right price’, then getting market data without millisecond delays might not be essential. 

Final Word on Automated Trading

It is not hard to see why automated trading has become so popular amongst retail traders. The best software offers flexibility, consistency and speed. In today’s often busy world, it caters to the growing demands on our time and energy. Automated trading solutions are also widely accessible and suitable for both championship traders as well as beginners.

However, if you do opt for an automated strategy, do not become complacent. The importance of frequent monitoring shouldn’t be underestimated. As Jack Schwager highlighted in his ‘Market Wizards’ book series that interviewed successful automated traders, a proactive approach to auto investing was recommended in order to excel.

Further Reading

  • Quantopian.com – a web site for researching historic stock price data and writing trading algorithms that can be backtested on that data.

Research

Books

FAQ

Is Automated Trading The Right Strategy For Me?

If you’re looking for an approach that enables you to trade according to predetermined limits, that offers flexibility and utilizes the latest technology, then automated trading strategies might be a good option for you. See our list of the best automated trading brokers to get started.

Can You Automate Day Trading?

Yes, traders can adopt automated systems for day trading. Some traders develop their own systems whilst others use third party platforms. There are lots of options available to traders of all levels but make sure you research a provider thoroughly to ensure they offer all the features you are looking for.

Is Automated Trading Difficult?

Trading is never easy, no matter how long you have been in the game for. Automated trading does offer some benefits, such as removing some of the high-pressure last minute decision making. It also offers traders more flexibility compared to other strategies as it does not require such close monitoring. But as with any strategy, to succeed you will need to dedicate time and effort.

Automated trading is legal. It is recognized as legitimate by regulatory bodies around the world. With that said, not all online brokers permit automated trading on their platforms. See our list of supported brokerages to find a suitable provider.

Do Automated Traders Make Money?

Some automated investors will make money and some won’t. There are so many factors that contribute to long-term trading success but a method you understand and have confidence in is a good place to start.

Further Reading