The use of automatic trading strategy is a “big business” not only for the retail traders but also for financial institutions Due to increasing processing power, fast network connection speeds and new upcoming technologies like ‘machine learning’, automatic trading becomes more and more lucrative. But what does it mean for a retail trader?
Could an Automatic Trading Strategy be Profitable
You probably already have heard about EA’s or so called Forex robots. Those are automated strategies that are coded by a programmer and run automatically on a Forex trading platform. However the sad truth is that only 1% of all Forex robots are actually making money. This is because most automatic trading strategies are designed and optimized only for a specified time period. You buy a robot today and it stops working within two months. Then, a new set of strategy rules or re-optimization is needed to make the system profitable again. This takes time, efforts, and is very costly. Most of retail traders will just buy a robot, discover that it doesn’t work and go and look for another shiny piece of software. After few tries they will probably say: automatic trading does not work and it’s one big lie. But is it?
What is the Next Big Thing in Automated Trading?
The new upcoming technology is the automatic trading strategy generation. Automatic strategy generation technique makes possible to design, test, and optimize thousands of different strategies in a “split” of a second. (Actually it will take some time but it is 10000 times faster then manual programming and testing). Using special tools designed for automatic trading strategy generation anyone without any programming knowledge can produce and test thousands of original trading strategies in a day. It is possible to test, optimize and select only the strategies that are making profit in current market conditions. This would never be possible with manual EA programming and testing.
What Are the Advantages of Auto-Trading
The biggest advantage is time-saving. The new strategies can be automatically generated and tested 24/7. In few days you can test millions of strategies and select only the best ones. The second advantage of automatic strategy generation is the fact that it really works. There are many examples of profitable strategies that are designed and generated not by humans but by computers. The last big advantage is that this is very new technology and there are many new things to discover. The era of automatically generated trading strategies has just begun.
If you want to learn more about auto-trading and auto strategy generation read here about it: Auto-trading blog
Written by: coensio.com