In the digital age, it is estimated that over 90% of all trades on US stock exchanges are performed by computers using automated trading software. A lot of traders wonder exactly how, or even if, they can make their splash in the automated trading scene.
If you’re not a hedge fund or multi-billion dollar financial institution, but you still want to give automated trading a try, what options do you have? The good news is that it is possible, and it wont’ cost you a dime.
Free Automated Stock Trading Software
Currently, TraeStation offers some of the only truly automated stock trading software on the market. With TradeStation EasyLanguage®, traders can write basic code to send simple or complex orders into the stock, options, or futures markets at anytime when certain parameters are met.
Best Automated Trading Software
TradeStation is pretty much the only online broker that doesn’t charge inactivity or market data fees and still offers an incredibly in-depth automate trading platform for all clients, regardless of balances.
With commands like, “if close crosses above 10-day SMA, buy stock at market” it’s very easy to get started with automate trading.
- Fixed $5 per trade or tiered commission plan for active algo traders
- Fully automated trading platform available
- Easy commands like “if, then”
- Free tutorials and PDFs available to help
- Previous programming experience NOT necessary
Check out this helpful guide if you’re looking for plain online stock trading software.
As with all forms of trading, there is always risk and uncertainty. With automated stock trading in particular, there is always the possibility of user-error when creating a trading algorithm.
This is something to be very aware of, so before you use real capital with any automate trading commands, always test it first with a paper trading account.
Will an Automated Trading System be Profitable Every Time?
It is highly unlikely that an automated trading system will be profitable 100% of the time. This is because trading systems are meant to be just that…”systems.”
They are deliberately designed to eliminate the human element of trading, i.e. emotions and slow decision making.
When you create a set of rules in a trading algorithm, those rules are followed, no matter what. If you decide that you want to buy 100 shares of every stock in the S&P 500 that has gone down for three consecutive days, the algorithm will do that and nothing more.
Humans, on the other hand, might decide that one stock doesn’t look that appealing because of some specific reason, or that a different stock looks very appealing. These arbitrary decisions are often the downfall of many traders.
The Speed of Automated Trading
Besides making a strict set of rules and sticking to them, automated trading software is faster than a human could ever hope to be.
This is an advantage. Of course you are not going to be as fast as Citadel, who leases co-located server space on the US stock exchanges for millions of dollars every month, but you will be faster than every other retail investor, and that is nothing to sneeze at.
Up to a certain point, if you’re not trying to gain an edge by having the fastest trading system that fills orders for fractions of pennies in fractions of seconds, speed doesn’t matter that much.
What matters is being fast enough to buy stock when XYZ occurs…or to sell stock when a specific technical factor happens, or to join the bid if the current size is more than 1,000 shares. Humans cannot do this across thousands of stocks five days a week, 52 weeks a year. That is simply impossible, and this is precisely why computerized trading exists.
More About Automated Trading Platforms
Make no mistake, automated and algorithmic trading involves a small subset of traders who often have large bankrolls they are willing to use. Most stock market participants are satisfied with making 7% in a year from their passive investments (if they’re lucky).
Traders who want to enter the world of automated trading are a rare breed.
As such, there are plenty of companies willing to charge a pretty penny for their automated trading software. Our recommendation is to avoid paying high prices for software that you can get 100% for free. TradeStation offers automate trading software completely free of charge, and it’s pretty easy to get the hang of it.
If this seems overwhelming, TradeStation offers a free 140 page EasyLanguage® guide that will help you get started.
With TradeStation’s automated trading, you can do everything from create alerts, make your own technical factors, create orders based on those technical factors, create stop-loss and conditional orders, and so much more.
Automated trading, if used correctly, can make your life easier, especially if you’re an active trader.
With TradeStation’s platform, you can automate your current trading strategy and spend your days monitoring your algorithm as opposed to watching screens all day.
And if you don’t have a current trading strategy, it’s not that hard to develop one. A great place to start is to look for patterns in the market, something Jim Simmons (one of the greatest quantitative traders of all time) calls anomalies. However subtle they might be, when you create an automated trading system that puts a portfolio of anomalies together, especially across different asset classes, you can have something quite special.
My guess is that most people don’t have the time, resources, know-how, or patience to try automated trading, as with most entrepreneurial endeavors in life. It is also worth nothing that the most successful hedge fund in history, Renaissance Technologies, is entirely automated.