Automated Trading Algorithms - Research on How to Start Automated Forex Trading
As a trader if you are looking to automate your Forex trading and trade with automated algorithms, you might be doing some research on how to start 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 Trading Algorithms
The above examples is a manual system that uses the rules below to generate trade signals.
Long Entry
Both Moving averages heading upward
RSI above 50
Both Stochastics going upward
Short Entry
Both Moving averages moving downwards
RSI below 50
Both Stochastics going downwards
These signals in the above examples are shown with red & bluelines.
To automate this system and come up with an automated trading algorithm, all you have to do is to use the above trading rules to write down the code for your automated system.
So to automate a buy signal, your automated trading algorithm will use this pseudo code, but you will have to program it using the coding language of your trading platform. For Examples you'll have to number it in MQL4 programming language, or what is basically C + + programming language.
Pseudo-code for automated trading 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 Trading Signal
Pseudo-code for automated trading algorithms
If 7 SMA is less than 5 SMA & RSI is less than 50 and stochastic %D period is less than stochastic % K period:
Then Signal = Sell:
To automate the above system all you have to do is to translate the above pseudo code to your platform programming language or alternatively ask traders in forums such as MQL4 Code Base community to translate it for you into a trading program or hire a programmer to do it for you.
If you can have a programmer to program it with the red & blue-line showing when the trading signals are generated like in the above screenshot the better for you, because the system will illustrate where the signals are getting generated & you can even look at how it would have historically traded the market on your chart.
The complete Forex system along with rules is shown below, the above version of this system has been simplified for programming purposes.
Learn MQL4 Expert Advisors Forex Programming & Coding
When it comes to Automated Trading and automated trading 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 traders such as those you find on online communities specifically the MQL5 community.
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 system on any currency pair & on any time-frame you select either using ticks or other different parameters you want your system to use.
Next thing you need to do is to refine your automated trading algorithm so that it makes a good profit on your trading account. This automated system should be tested on a practice demo account.
After you test it out on a Forex demo account then to trade the market you need to hire a VPS - Virtual Private Server , that can run your Forex Expert Advisor 24-7, the Forex Expert Advisor cannot run on your computer 24-7 and if it can there might be interruptions on the inter-net connectivity. This is why you need to hire a VPS to host your Forex EA on. A VPS costs anything between $30 - $100 dollars per month even more depending on what VPS specifications you want. The cost will depend on the memory of the server, the disk space you want and the band-width that your system will take up when placing trades. So the more trades the more bandwidth you require.
If your automated algorithm is profitable enough to pay for VPS for forex 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 broker where it will trade & place trades. Alternatively there are many other companies that provide VPS for forex Expert Advisor hosting as a service on its own. As a trader once you buy VPS Hosting, then the hosting company will illustrate to you how to install the MT4 of your broker on this VPS and then install your EA and how to login remotely to this VPS server, from your computer and change any settings of your Expert Advisors. The VPS server is a specialized computer which runs 24-7 without need to shut it down after a few hours.
On the VPS, your VPS provider will pre install MetaTrader 4 forex platform from your broker, and you will connect to the server remotely using the Remote Desktop Protocol and that way you will have access to the server, the platform & your Expert Advisors. VPS will run 24-7 and you as a trader can use access it anytime from anywhere.
If your automated trading 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 and can run continuously 24 7.
