The Pitfalls of Algotrade in the Brokerage Companies

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The Pitfalls of Algotrade in the Brokerage Companies

Category : Robots

Information technologies flooded the financial sphere. The level of Internet banking and remote systems for making transactions grows each and every day. It’s great when we do not need to wait in lines to pay our bills, but just get the phone and pay for a product or service in a few clicks. Financial markets have also come under the influence of the Internet, and today you do not need to call the broker or send a fax to complete the trade. It is quite enough to have a computer with Internet access and by clicking on the same simple button to perform a trading operation.

Undoubtedly, for a full-fledged, and most importantly profitable trade, you need to have a trading strategy with clearly defined risk and money management policies. However, you do not need to always look at the monitor for making transactions on the fix api forex market. This role was taken by the trading robots that are capable of trading around the clock and do not deviate from the given algorithm even by a single step. Such a simple logic of automatic strategies has provoked the emergence of many automatic programs for fix api trading. I’ll not tell the true if I say that the robot is a guarantor of success. No, it’s not like that at all. The robot is essentially an automatic system ( ). And also like any other system, it is not ideal, because not even every robot is perfect in its trading interpretation. But I do not hide the fact that there are algorithms that are capable of demonstrating a huge interest rate of return. It is this huge profit potential that frightens brokerage companies, and some firms restrict or completely prohibit the algotrade.

In order for such restrictions to take effect, a broker may introduce a number of restrictions, which not every fix api trader knows about:

  1. Setting the delay in the order execution (slippage): this is the simplest and the most common way for the broker to limit trading high-frequency and speculative robots. If the logic of the algorithm is based on the principle that the transaction should be performed in a matter of a fraction of a second, the speed of execution of trading operations is extremely important in such algorithms. But if you limit this parameter, the result from the speculative transactions will be unprofitable and such an algotrade will only provoke a loss of money.
  2. Additional mark-ups: if the trading robot demonstrates a moderate increase in profit and does not overstate the risks, the broker can set additional margins and spreads to reduce the performance of the trading algorithm. The trader will lose an invisible interest rate of return, and the broker will reduce his payment risks.
  3. Non-payment of the formed profitability due to the robot trade: the most dishonest brokerage companies allow trading with algorithmic programs, take commission, but when the trader has a desire to withdraw funds, the problems start. After that it turns out that it is impossible to conduct trade with the help of a robot, or the company claims to use malicious programs, which is absurd.
  4. Display of zero prices in the trading terminal and on the server of the company: brokers that prohibit the use of programs on their accounts can specially display zero prices in the fix api mt4 terminal logs. Thus, they indicate that there was no price for a financial asset. In such a situation, the robot will close all opened trading operations, not at zero value, but at market value. Also, such a hidden nuance distorts any technical analysis with the help of indicators.

To avoid the situations, which I described above, you can use helper programs whose purpose is to disguise the transactions performed by the robot – . This module of manual trading operates on the autoclick principle, and when the situation of opening a position arises, the robot’s transactions are directed into the module, and from there the transaction is opened in a standard way. Thus, the broker cannot track your algorithmic transactions and to have an influence on them.

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