Can you use an automated trading system to trade CFDs at FxPro as of November 2023?
Yes, at FxPro you can use an automated trading system (ATS) for algorithmic (algo) trading of CFDs.
There are two methods for how you can trade CFDs in this manner at FxPro: you can either use the MetaTrader platform offered by FxPro, or connect directly to the broker's trading platform using an API (Application Programming Interface).
- Algorithmic trading automates trading decisions using computer programs based on a set of predetermined mathematical instructions.
- The most common ways of using automated trading is through the MetaTrader platform or by connecting an API to a broker's trading system.
- The advantages of automated trading include removing emotions from the process, speed, efficiency and risk management.
- You can use a tool called Expert Advisors for automated trading on MetaTrader.
- To connect an API to the broker's system, follow the instructions found on the broker's site.
- At BrokerChooser, we exclusively recommend providers regulated by top-tier authorities, adding to the legitimacy of these brokers.
Most importantly, make sure you understand and are aware of the risks of CFD trading and know how to manage them. If you are confident in your knowledge and have a sound trading and risk management strategy, you can more comfortably handle the challenges of trading CFDs at FxPro.
79.27% of retail CFD accounts lose money
What is automated (algorithmic) trading?
Automated trading, also referred to as algorithmic (or algo) trading, involves using a computer program that follows mathematical instructions to automatically make trading decisions. These programs analyze market developments and trends, for example price charts, and use preset rules given by the programmer to determine whether to buy or sell various assets on financial markets, based on the algorithm's guidelines. Once the predefined criteria are met, the computer will also exit the position.
By removing emotions from the decision-making process, algorithmic trading allows traders to convert precise principles, such as the exit point and position size, into an automated system where the computer makes the decisions instead of the trader. This can help increase the reliance on logical strategies and minimize risk.
Traders can create customized platforms by building an API using coding and connecting it to the trading systems of brokers that support API access. This enables efficient order placement, trade execution, and access to real-time market data, providing traders with the tools needed to implement algorithmic trading effectively.
What are the advantages of using algo trading for CFDs?
CFDs are risky instruments due to the usage of leverage, which can multiply your profits but also amplify your potential losses. With automated trading, it is especially important to understand the risks involved with trading CFDs.
Algorithmic trading, or algo trading, can offer several advantages when trading Contracts for Difference (CFDs):
- Take emotions out of the equation: Algo trading removes emotional and impulsive decision-making from the trading process. As orders are processed automatically once you have set the predetermined rules, emotional factors such as fear or greed, which would otherwise impact manual trading decisions, are minimized.
- Speed and efficiency: Algorithmic trading enables high-speed, automated, consistent execution of trades, regardless of market conditions or human biases. Algorithms can analyze market conditions, identify trading opportunities, and execute trades with minimal delay, potentially leading to faster order placement.
- Backtesting: Before actually using the automated trading or the underlying algorithm, traders can evaluate their rules using the old data and optimize trading strategies. This allows the traders to minimize potential mistakes.
- Diversification: With algo trading, you can use multiple strategies at the same time, diversifying your trading approach across different markets or CFD instruments.
- Risk management: Automated trading allows for the implementation of risk management measures like stop-loss orders, trailing stops, or profit targets. These can be automatically applied within the algorithm to help manage risk.
On the negative side, automated trading systems also carry some disadvantages, some of which are the possibility of technical issues and system failures; the need for human monitoring of the trading system; the complexity of designing an effective trading system; and over-optimization, where strategies perform well in testing but fail to perform in real-time market conditions.
How to use MetaTrader for automated trading
MetaTrader is one of the most popular and widely-used trading platforms. This platform, which offers versions MetaTrader 4 (MT4) and MetaTrader 5 (MT5), has a strong feature called Expert Advisors (EA) that allows users to carry out automated trading.
To trade financial markets using algorithms on MetaTrader, you can set up an Expert Advisor, which is basically a robot that automatically places trades for you and can also manage position sizes when placing orders.
Expert Advisors are programs or scripts written in MQL (MetaQuotes Language). Although coding knowledge is not needed to use some pre-built Expert Advisors, if you want to develop or modify Expert Advisors to fit your specific trading strategy, you will need some proficient coding skills.
Make sure to check the broker's website for more detailed instructions on how to use MetaTrader for automated trading at FxPro.
You can also check out our top broker recommendations in our article on the best MetaTrader brokers.
How to connect an API for algo trading
If you have the necessary programming skills, you can create your own automated trading strategy for algo trading by coding your own program. Once that is done, you can connect this program to the trading system of a broker that allows this, which would happen through what is known as an API, or Application Programming Interface.
FxPro allows you to connect your own API to its trading system, making it possible to to carry out automated, or algo trading.
The exact process of connecting an API may differ from broker to broker, so make sure to check the broker's API documentation for accurate and up-to-date instructions. In general, you need to go through the following steps:
- Check the broker's API documentation.
- Get the required API credentials. You'll need an account with the broker and request API access, which usually involves creating an API key or token.
- Complete authentication.
- Set up the API connection.
- Implement your trading logic.
- Testing. Test your integration and make any necessary adjustments or refinements to your code.
Looking for a CFD broker?
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