Automated Algorithms - How to Start Automated Trading
As a trader if you are looking to automate your trading and trade with automated algorithms, you may be doing some How to Begin automated trading. The example below shows a currency pair chart along with where an automated system is supposed to generate signals and which signals it should generate.
Forex trading with Automated Algorithms
The above examples is a manual system that uses the rules below to generate signals.
Long Entry
Both Moving averages moving upward
RSI above 50 Level
Both Stochastics going up-ward
Short Entry
Both Moving averages moving downwards
RSI below 50 Level
Both Stochastics going downwards
These signals in above examples are shown with the red & blue-lines.
To automate this system and come up with an automated algorithm, all you've to do is to use the above rules to write down the code for your automated trading system.
So to automate a buy signal, your automated algorithm will use this pseudo code, but you'll have to program it using the programming language of your platform. For Example you'll have to code it in MQL4 programming language, or what is basically ##3++CC++ programming language.
Pseudo-code for automated algorithms
If 7 SMA is greater than 5 SMA and RSI is greater than 50 and stochastic %D period is greater than stochastic %K period:
then Signal = Buy:
To automate the sell Signal
Pseudo-code for automated algorithms
If 7 SMA is less than 5 SMA and RSI is less than 50 and stochastic %D period is less than stochastic %K period:
Then Signal = Sell:
To automate the above trading system all you have to do is to translate the above pseudo-code to your trading platform coding language or alternatively request the traders in forums such as MQL4 Code Base forum to translate it for you in to a system or hire a coder to do it for you.
If you can have a coder to program it with red & blue line showing when trading signals are generated like in above screenshot the better for you, because the system will show where the signals are getting generated and you can even look at how it would have historically traded the market on your chart.
The complete system along with rules is illustrated below, the above version of this trading strategy has been simplified for programming purposes.
Learn MQL4 Expert Advisors Programming & Coding
When it comes to Automated Trading and automated algorithms - traders need to learn a bit of coding to make their own automated programs or they can have their system coded or programmed by other online traders such as those you find on online communities specific the MQL5 community forum.
Next thing to do is to test thoroughly using a program such as the MT4 Strategy Tester. This provides an environment where as a trader you can test your automated trading system on any currency pair and on any time frame you choose either using ticks or other different parameters you want your system to use.
Next thing you need to do is to refine your automated algorithm so that it makes a good profit on your account. This automated system should be tested on a practice demo practice account.
After you test it out on demo trading account then to trade the market you need to hire a VPS - Virtual Private Server, that can run your Expert Advisor 24-7, Expert Advisor cannot run on your desktop computer 24-7 & if it can there may be interruptions on inter-net connection. This is why you need to hire a VPS to host your EA on. A VPS costs anything between $30 - $100 per month even more depending on what are the VPS specifications that you want. The cost will depend on memory of the server, disk space you want & band width which your system will take up when placing trade transactions. So the more the trades the more bandwidth you require.
If your automated algorithm is profitable enough to pay for VPS for Expert Advisor hosting fees then you can host it with a currency broker that will provide you with this VPS hosting & then open an account with the broker where it'll trade and place trades. Alternatively there are many other companies that provide VPS for EA hosting as a service on its own. As a trader once you buy VPS Hosting, then the hosting company will show you how to install MetaTrader 4 of your online broker on this VPS & then install your Expert Advisor & how to log in remotely to this VPS server, from your PC Desktop computer and change any settings of your Expert Advisors. The VPS is a specialized computer which runs 24-7 without need to shut it down after every few hours.
On the VPS, your VPS provider will pre install MT4 software from your online broker, & you will connect to the server remotely using the Remote Desktop Protocol and that way you will have access to server, the software and your EAs. VPS will run 24-7 & you as a trader can use access it anytime from anywhere.
If your automated algorithms requires to be online throughout the week and then VPS should be a good option, your Expert Advisor will be online 24 7, VPS machines don't require to shut down & can run continuously 24 7.
