Here we take a look at the best automated day trading tools and explain how to effectively use auto trading strategies. More than 75% of the securities exchanged on U.S. markets come from orders from automated trading systems. Known by a range of names, including mechanical trading systems, algorithmic trading, system trading, and expert advisors (EAs), they all operate by allowing day traders to insert complex trade entry and exit rules.

When programmed, your automated day trading software will then execute your trades automatically. Sounds fine right? You can sit back and wait, watching the money roll in.

Automated Day Trading Explained

You opt for a plan and the rules. Then, these are programmed into automated systems, and the machine gets to work. It’s incredibly sophisticated software that you can get today.

Trade entry and exit rules, such as moving average crossover, can be embedded in straightforward conditions.

They can also be based on complex techniques, however, which involve an in-depth understanding of the platform-specific program language.

When the rules are programmed in, automated systems can track the markets and determine whether to buy and sell based on the rules of the specific day trading strategy you have selected.

While dependent of your preferences, your day trading algorithms will all automatically generate orders for protective stop losses, trailing stops, and profit goals once a trade is entered.

If you’re in a fast-moving marketplace, instant order entry may be the difference between a tiny loss and a big one in case the trade moves against you.

Some specialized tools for automated day trading will also track the news to help make your trades.

Strengths & Weaknesses

Strengths

Weaknesses

Getting Started

There are many things to keep in mind even with the best automated apps. First, keep it easy as you gain some experience, then turn your hand to more complicated, automated day trading strategies.

Copy Trading may provide a solid introduction to automated trading for beginners.

Many automated systems are tailored for success in some markets and different modes of trade.

So bear in mind that if you apply your automated day trading algorithms to several different markets you can not get the returns you hope for.

Whatever your automated software, ensure a strictly mechanical strategy is created. Automated day trading systems are not capable of making guesses so eliminate all discretion.

Copy Trading

Copy-trading is a very simple type of automated trading at the most basic level.

Copy Trading helps you to mirror other trader’s trades. And you can ‘track’ a trader (or better yet, a group of traders) by looking at their past results and detailed trade information.

You’ll see those trades opened on your account because when those traders open and close trades. You can change how much you want to spend and someone with $100 will still be able to watch someone doing $1 m trades.

Copy trading means you don’t take the risk to open and close trades. You still have to pick the traders to copy, but all other commercial decisions are taken from your hands.

Perhaps copy trading is the least “hands on” of any automated exchange.

Finding The Best Automated Software

When it comes to automated day trading software, there’s no one size fits all.

The choice will come down to your needs, the market on which you want to apply them and to how much customization you want to give yourself.

Professional traders may also want to build their own trading software from the ground up, in order to achieve ultra-fast automated trading that is fully customized to their needs (more about that later).

Below are some of the most common automated ready-made systems out there:

Developing Your Own Software

If you are unable to find a commercially available program that provides you with the functions you need, then building your own proprietary software is another choice.

Doing so is easier than ever thanks to code editing tools like VIM and online marketplaces that make it easier to find freelancers with the skills required.

Developing your own software offers a range of benefits and risks:

Benefits:

Risks:

Study available software on the market until you decide to build your own.

There are two key ways to developing your own apps for commercialization. Build it yourself or get someone else employed to design it for you.

Programming the Software Yourself

Designing your own trading software requires simple programming knowledge, as well as information about how to code a trading algorithm.

Numerous software packages help make the process simpler, but they all demand that you have basic programming skills.

No tool can help with a lack of programming skills but one of the best editors to create your automated trading bot is Vim for experienced coders.

Vim is an universal text editor designed specifically for creating your own software. It was created in 1991, by the founder of Vim, Bram Moolenaar.

Vim is based on a text editor by Bill Joy. Vim is “charityware” – all of its proceeds are used in Uganda to support kids. Vim makes creating and editing software very easy.

Automated Day Trading

Vim is a command-based editor – to trigger various features, you use text commands, not menus.

The command-based interface makes a very lightweight clean interface for the software while still providing a comprehensive range of features.

Vim is ideal for novices, as well as professional developers.

The simple tool allows you to review your code and find bugs before they cause any problems. The platform is very common with software developers due to this.

Hundreds of programming languages can be adapted to be handled by it, and Vim also supports several different kinds of plugins for additional functionality.

API

If you want to build a software on your own then you can create it almost any way you want.

Nonetheless, the API (Application Programming Interface) that your trading platform offers will limit your independence.

The API is what allows the trading applications to interact in order to place orders with the trading platform.

Your trading software can only do trades that are sponsored by the API of third-party trading platforms.

If a specific feature is important to you, you need to make sure that you select a platform with an API that offers that function.

Your bot will also have to import market data in some way, probably in “real-time” (with extremely low delay) if your trading algorithm has to respond in some way to what is happening in the markets right now.

If trade decisions are more focused on fundamental factors and are just waiting for the “correct price”, it may not be necessary to get market data with a millisecond delay.

Hiring A Software Builder

If you don’t know how to build the app yourself, or if you don’t have the resources to do so, then you’ll need to hire a freelancer or a company.

You can select either a local developer or an online freelancer. Communicating with them and producing the desired outcome is simpler, when using a local developer that you can see in person.

It can also be easier to use a freelancer online. It can encourage you to choose a developer who is more experienced in software trading, as this is a very unique ability.

Be sure to employ a professional developer who can build a stable program that works perfectly. Don’t try to make it as cheap as possible.

A quality trading software is invaluable. A robot that is badly built will cost you a lot of money, and end up being very expensive.

It is important that you give a clear view of exactly what you expect from the trading program and tell it to the developer. Include the overview of all necessary functions you need.

Do not assume anything is a given. The developer is unable to read your mind, and does not know or believe the same things as you.

Final Verdict

Automated day trading is becoming ever more popular. But, once you go down that path you still have to test your plan back and forth. But let’s be clear, nothing is a substitute for carefully done manual trade.

Do not become complacent if you put your faith in automation.

This was illustrated in Jack Schwager’s ‘Market Wizards’ book series, where he interviewed successful automated day traders.

All stressed that they were heavily active in their digital strategies, so don’t leave your tradings alone.