Automatic trading

Automatic or robot trading, also known as algorithmic trading, is a trading method that uses computer algorithms to make decisions and execute trades. This type of trading is often used by traders who want to remove the emotions from their decision-making process and rely on a set of rules to determine when to enter and exit trades. The most commonly used programming language for automated trading is MQL, which is used to create Expert Advisors (EAs) for the popular trading platform, MetaTrader.

In the process of developing an EA, traders must go through several phases, including planning, testing, and optimization. During the planning phase, traders define their trading strategy and set the parameters for their algorithms. In the testing phase, traders use historical data to simulate trades and assess the performance of their algorithms. Finally, in the optimization phase, traders fine-tune their algorithms to improve their performance and reduce risk.

One of the advantages of using automated trading is that it allows traders to execute trades 24/7, even when they are not physically present at their computer. This can be particularly useful for traders who have a busy schedule and cannot spend all day monitoring the markets. Additionally, automated trading can help traders to avoid making emotional decisions and stick to their predetermined rules.

However, there are also some disadvantages to using automated trading. One of the biggest risks is that the algorithms may not perform as well as expected, which can lead to significant losses. Another risk is that traders may become too reliant on their algorithms and not be able to make decisions on their own if the market conditions change. Finally, traders must ensure that their EAs are properly tested and optimized before they go live, as this can help to minimize the risk of losses.

This lesson introduces the program types of the MQL language, the phases of planning, and the advantages/disadvantages of Expert Advisors.