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Algo trading provides many advantages but not every broker has the best environment for it. Here, you may find a few suitable brokers for algo trading.
Trading has become easier and faster as technology and computers have advanced. Instead of using traditional methods with brokers, many traders can now use computer programs to easily execute trades. In theory, with meticulous programming, this type of trading can generate profit at a rate and frequency that a human trader cannot match. This article will discuss algo trading and how to choose the best platform for it.
Contents
What is Algo Trading?
To place a trade, algorithmic trading (also known as automated trading, black-box trading, or algo trading) employs a computer program that follows a defined set of instructions (an algorithm). Timing, price, quantity, or any mathematical model are used to define sets of instructions. Aside from profit opportunities, algo trading makes markets more liquid and trading more systematic by removing the influence of human emotions on trading activities.
To execute trades at precise times, it combines computer programming and financial markets. Algorithmic trading attempts to remove emotions from trades to ensure the most efficient execution of a trade by instantly placing orders. Trend-following strategies, arbitrage, and index fund rebalancing are all common trading strategies. Algorithmic trading can also be based on trading volume (volume-weighted average price) or time (time-weighted average price). To get started with algorithmic trading, you'll need a computer, a network connection, financial market knowledge, and coding skills.
Let's say a trader wants to trade with these two algorithms:
- Buy a currency pair when the 50-day Moving Average goes above the 200-day Moving Average.
- Sell a currency pair when the 50-day Moving Average goes below the 200-day Moving Average.
Based on these two instructions, the computer program will monitor the price and the indicators, and do the trade if the conditions are met. With this, the trader doesn't need to monitor live prices and the graphs, nor manually input the trade. The computer program can do the trade based on the algorithm that has been set.
Brokers with the Best Support for Algo Trading
Now I know you have a lot to consider now before doing algo trading. Especially if you are not proficient enough in computer programming or just don't want the coding hassle in general. Here we have compiled some brokers for algo trading to help you!
We consider the number of automated trading platforms, the presence of APIs, the general quality of the service, the efficiency of order execution, the presence of forex VPS, special features for experienced traders, and their unique features as key aspects in providing the best algo trading experience.
ICMarkets
ICMarkets is an ECN broker that allows you to create and install Expert Advisors on MT4, MT5, and cTrader. ICMarkets' highlight is the speed of the order execution, which makes it great for implementing automated scalping techniques. You can start trading by opening a cTrader account in this broker. In addition, there are also FIX APIs available for clients. The spreads on ICMarkets are equally low, starting from only 0 pips.
IC Markets is an online forex broker operating under the company of International Capital Markets Pty Ltd. Traders under the Australian jurisdiction are provided with the trading service of IC Markets AU that is headquartered in Australia and licensed by the Australian Securities and Investments Commission (ASIC).
On the other hand, non-Australian traders who open an account in this broker are registered under IC Markets SEY that is based in Seychelles, and regulated under the Seychelles Financial Services Authority (SFSA). The dual operation is a result of the relatively new rules from ASIC that prohibit their regulated broker to offer trading services outside Australia.
Classified as an ECN broker, IC Markets provide clients with MetaTrader 4, MetaTrader 5, cTrader as platform trading options. This broker also follows market trends to include Cryptocurrencies as one of its products, enriching its already wide selection of trading assets that include Currencies, Indices, Metals, Energies, Softs, Stocks, as well as Bonds.
The minimum deposit in IC Markets is in the middle range compared to other ASIC-regulated brokers, as it reaches $200 for every client. Market analysis materials are also prepared regularly for trading insights on IC Markets's official website, proving their competence to serve their traders with important contents created by market experts that work specifically for them.
For payment methods, IC Markets allows funding and withdrawal via wire transfer, credit card, PayPal, Skrill, Neteller, FasaPay, UnionPay, as well as Bitcoin via BitPay. The more interesting aspect from this broker is its multi-base currencies that include USD, AUD, EUR, GBP, SGD, NZD, JPY, CHF, HKD, and CAD.
As the trading technology in IC Markets is highly equipped with co-located servers and extremely low latency (especially on cTrader), the broker is widely known for its capability in hosting traders with the special needs for high-frequency trading as well as scalping.
To sum up, IC Markets is a fitting destination for active traders looking for a well-regulated broker. IC Markets is also flexible in terms of base currency and payment methods, signaling their commitment to welcome traders beyond their home country. As of late 2019, IC Markets provided their website in 18 international languages including English, Korean, Indonesian, French, Spanish, Italian, Malay, German, and Chinese.
RoboForex
RoboForex is well-known for its sophisticated multi-asset automated trading platform, R StocksTrader. R StocksTrader lets you create trading robots for multiple markets using a detailed editor, even if you don't know how to program one using the API. Furthermore, the RoboForex platform provides a powerful backtesting tool for automated strategies, allowing traders to examine historical data dating back to 1970. RoboForex allows you to create, test, and run an unlimited number of trading robots, making it suitable for newbie algo traders.
Well-known as one of the most committed brokers in trading technology advancements, RoboForex reaches out to a wide range of traders, from beginners to the more experienced ones who seek sophisticated trading environments with ECN-like spread and execution. The company is established in 2009 and holds a head office in Belize. Registered under the IFSC Belize, RoboForex manages to attract clients with fantastic leverage as high as 1:2000.
Following its commitment to be the forefront in terms of a high technology forex broker, RoboForex provides various trading platform choices including MetaTrader 4, MetaTrader 5, Social Platform, and its proprietary platform.
Trading instruments range from Currencies to Metals, Indices, Energies, Stocks, and ETFs. Aside from basic service, trading in RoboForex also presents a collection of distinctive features such as the PAMM system and Social Trading network developed with their own brand of CopyFX, ETFs, and stocks that reaches up to thousands as the available trading assets, and tight spreads.
RoboForex also accepts payment through a surprising online gateway besides wire transfer and credit card. The alternative methods are Skrill, Neteller, UnionPay, Perfect Money, and other similar online payments.
After opening an account, traders can start with a minimum deposit as low as $10 in Pro Accounts. To specify, here is a short description of each type of accounts that traders can choose from in RoboForex:
Pro-Standard
- Minimum Deposit: $10
- Spread: from 1.3 points
- Minimum order volume: 0.01
- Leverage: up to 1:2000
ECN-Pro
- Minimum Deposit: $10
- Spread: from 0 points
- Minimum order volume: 0.01
- Leverage: up to 1:300
Prime
- Minimum Deposit: $5,000
- Spread: from 0 points
- Minimum order volume: 0.01
- Leverage: up to 1:100
Pro-Cent
- Minimum Deposit: $10
- Spread: from 1.3 points
- Minimum order volume: 0.1
- Leverage: up to 1:2000
R Trader
- Minimum Deposit: $100
- Spread: from $0.01
- Minimum order volume: 1 stock
- Leverage: up to 1:200 (during the trading session) and up to 1:4 (after the trading session)
The R Trader account signifies RoboForex's attempt to distinguish forex and stock trading condition. It appears that the platform used in that particular account is RoboForex's in-house product that is specifically designed for stock online trading.
The overall description above depicts RoboForex as a distinguished broker despite its status as an offshore-regulated entity. Not only successful in providing various trading technology, but RoboForex also focuses on stock trading for more conservative traders. However, it is also important to note that RoboForex is one of the few brokers that boldly offer an extremely high perimeter of leverage at 1:2000.
Interactive Brokers
Interactive Brokers provides an advanced API system that enables experienced traders to manage their automated trading more effectively. IB provides a REST API, as well as the open-source IBKR API and the FIX API. Trading robots and algorithms can be written in C++, C#, Java, Python, ActiveX, RTD, or DDE using IBKR's proprietary platform. Professional clients with an IBKR Pro account will have access to more advanced automated trading services with 13 pre-functioning algorithms, which the user will simply have to configure according to their strategy. This is ideal for advanced and professional algo traders.
Interactive Brokers is a direct market access broker that provides execution, clearance, settlement, and prime brokerage for customers. Since it was found 41 years ago by Thomas Peterffy, the company has grown internally to become one of the premier securities firms with over $7 billion in equity capital.
First acknowledged as a popular broker for advanced traders, Interactive Brokers launched a second tier of service called IBKR Lite for more casual investors in 2019.
The IBKR Lite provides services on over 125 market destinations worldwide and gives direct access (online) trade execution and clearing services, both to institutional and professional traders for a wide variety of traded products including stocks, options, futures, forex, fixed income, and funds worldwide. Interactive Brokers Group and its affiliates execute over 859,000 trades per day.
Headquartered in Greenwich, Connecticut, Interactive Brokers has over 1,400 employees in the USA, Switzerland, Canada, Hong Kong, UK, Australia, Hungary, Russia, Japan, India, China, and Estonia companies. IBKR is regulated by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the Financial Conduct Authority (FCA), and is registered in the New York Stoch Exchange (NYSE).
Interactive Brokers offers a wide range of product-centered tools like the OptionTrader and Probability Lab for simplified single and complex multi-leg option trading; FXTrader for forex trading, Mutual Fund/ETF Replicator for helping traders find a lower cost on ETF alternatives, also fixed-income screeners for corporate and agency bonds. Overall, trading with Interactive Brokers would be provided with the most useful and updated tools to maximize trading and investing goals.
As a popular and regulated broker in the US, Interactive Brokers has won some awards. Recently, they were awarded by the Barrons as the 2019 Best Online Broker, which is categorized as the best broker for mobile, international, and frequent traders. Besides, they also won an award as Top Performing Broker by the Preqin Service Providers, and Best Overall Broker by Investopedia (Best for Low Costs, Best for International Trading, Best for Options Trading, Best for Day Trading, and Best for Penny Stocks). The awards are not only achieved during 2019. Since 2005, Interactive Brokers has won lots of awards regarding its best services for clients.
To optimize clients' trading speed and efficiency, Interactive Brokers provides some powerful suites of trading platforms. Below is the list:
- Client Portal
A one-stop destination to check quotes and place trades, see account balances, Profit and Loss, as well as key performance metrics, funding, and reporting. - Desktop TWS
A flagship platform designed for active traders and investors who trade multiple products and require power and flexibility. Opening an account in Interactive Brokers and using this platform allows traders to utilize the most advanced algorithms and trading tools, as well as a library of tools and asset-based trading layouts for optimum customization. - IBKR TWS for Mobile
The IBKR TWS for Mobile is made for traders who want to easily trade and monitor their IBKR account on-the-go from either iOS or Android device (tablet or smartphone). - IBoT
IBoT is a robot for finding information and placing orders using clients' own words. IBot is available on TWS for Desktop, IBKR Mobile, and Client Portal. - IBKR WebTrader
IBKR WebTrader is made for traders and investors who prefer a simplified interface. - IBKR APIs or IBKR Pro
This trading platform is provided especially for traders and investors who want to write their trading software or automated trading programs; third-party software users.
Overall, Interactive Brokers has always been a great choice for those who want to find out a credible and regulated broker for trading. Offering lots of trading platforms, Interactive Brokers has committed to provide their best services for both novices and professionals, since it is suited to every clients' needs.
Admirals
Admirals offer automated trading on both MT4 and MT5 platforms. Their highlight is the use of Supreme Edition MetaTrader for free and it can also be installed on the broker's VPS. For you who still don't have VPS, you can obtain it from them for free too if you reach certain conditions.
FP Markets
FP Markets is a highly adaptable algo trading broker. The ASIC-regulated broker offers internal solutions such as a copy trading platform, as well as external solutions such as MyfxBook Autotrade in addition to allowing algo trading on MT4 and MT5. Autochartist may be linked to MT4/MT5 accounts at FP Markets for market analysis. FP Markets offers its traders a VPS connected to the Equinix NY4 servers network, which reduces latency and lets EAs run 24 hours a day, seven days a week.
Keeping positions open overnight won't result in the overnight/rollover fee reducing your earnings, so you don't have to worry about it. FP Markets offers the most competitive swap rates in the industry by introducing Swaps Points in the form of a live swap rates list on the MT4 and MT5 platforms. Here are some examples:
- ACWI: -5.00 for long positions and -2.50 for short positions.
- ADAUSD: -20.00 for long positions and -20.00 for short positions.
- AGG: -5.00 for long positions and -2.50 for short positions.
The Bottom Line
Algo trading combines computer software with financial markets to open and close deals using predefined code. On a larger scale, institutional investors and dealers may use processing power to engage in high-frequency trading. But that doesn't mean you won't have a hand to try in algorithmic trading. In fact, you can start to learn and get the advantages of automated trading on retail platforms that allow such a strategy. In this case, the abovementioned brokers can be a good start to try.
1 Comment
Chloe
Aug 23 2022
Although there are many benefits that may be realized through algo trading, it is an extremely difficult strategy to actually put into practice. Because of this, a variety of different brokers provide an option known as Algo Trading, which streamlines the trading process for investors.
Trading will become less complicated and more speedy as technological advancements and computer capabilities continue to advance.
To choose a broker who can be relied upon to engage in algorithmic trading, however, calls for tremendous prudence on your part, and you must keep in mind that this is something you must keep in mind. in order for you to enjoy the benefits that are expected to be provided.