What Tech Savvy Traders Must Know About Bots


Traders who know a bit about technology and programming, even at the most basic level, are taking advantage of those skills to create their own robotic programs. What’s the goal? For most of them, it’s about building a primary or secondary source of regular income. Even part-timers who build a DIY bot can incorporate the code into many of the popular platforms via online brokerage accounts.

But what do newcomers to this approach need to know about bots, platforms, and brokers? At the very least, it’s helpful to understand how online firms interact with DIY programs, unique computer codes, and other features of existing auto-trade setups. Other areas where you’ll want to brush up include how to integrate your bot with a branded platform, why black-box solutions and products are usually not a wise choice, and the many advantages of back-testing, demo accounts, and trial memberships. The following topics offer a solid start for anyone who wants to use a DIY investment robot to get involved in market action.

Proprietary Software & DIY

Note that whenever someone creates their own bot from scratch, they’re essentially dealing with proprietary software with a one-person license. Others can’t gain access to your creation even when you utilize it on the platform of a broker’s website. Some investing devotees choose to pay for signal services from third parties and receive trade calls via a smartphone app. If that’s the case, there are several easy ways to translate those signals directly into your broker’s platforms and place live trades. For those who don’t want to build their own robots or are still learning how to code, this kind of direct-to-broker arrangement can work well.

Integrate Your Own Tools

For traders who know the basics of programming, it’s easy to integrate robotic tools within an online broker’s trading platform. There are several advantages to this approach, primarily that you get to use a unique, self-designed bot system. Fortunately, there are no-cost tools and tutorials on the internet that do a good job of teaching first-time coders and programmers how to construct trade smart robots. Account holders who work with one of the online trading platforms by AvaTrade gain access to extensive customer support, the ability to tweak their trading robot whenever they wish, and integration tools that make it simple to incorporate a DIY program into a world-class platform.

Avoid Black Box Systems

Recently, several companies have begun offering black-box solutions, also known as stand-alone bots, for traders who have neither the time nor skill to do the job themselves. The two problems with these products are that they are both overpriced and do not reveal their methodology to customers. For the technical-minded who like to use robotic order entry, the main goal is to craft a system that meets their own parameters, risk tolerance, and other requirements. Black boxes fall short in all those areas.

Test Drive Before Committing

No matter how simple or complex your DIY bot trader is, it’s imperative to test platforms before committing to a particular website, broker, and account. Spend at least one week test driving all the features of whatever systems make your shortlist. Take notes about any problems you encounter with integration, order placement, setting stops, tracking account balances, etc.

Use Demos

A more comprehensive way to experiment is to work with demo accounts. They allow account holders to use fictitious funds under real trading conditions. Of course, the pressure of having your own money on the line is absent, but the demo mode does several things very well. First, it helps new customers learn how to navigate all the unique features of a given site. The practice mode also lets programmers run their auto-traders in real-time, under authentic conditions, but without the risk of losing capital.

Remember the Market Lifecycle Rule

No matter how capable your DIY coding and programming skills are, there’s a lifecycle to every excellent trading robot. Understanding the lifecycle rule can prevent mistakes and frustration. The basic principle is that bullish and bearish trends are cyclical. Thus, no system will perform equally well over a long period of time. Don’t be surprised if your favorite DIY or template-built bot programs work well for a year or so and then begin delivering less than profitable returns.

When that happens, it’s time to either tweak or rebuild from scratch. The beauty of having basic programming skills is that you can rearrange the components of a successful system to match the new parameters of the fresh market cycle. Be prepared to adjust and do maintenance on your creations at least once per year for optimal results.

Tech Digest Correspondent