Practically any trading strategy devised by a trader can be described using a programming language. In the MetaTrader ecosystem (which we discussed in the previous article), the programming language is called mq4 (for writing programs for the MT4 platform) and mq5 (for writing programs for the MT5 platform).
After describing all the rules of a trading strategy in a specialized programming language, this code is compiled into a specific program (an expert advisor) that is installed on the MetaTrader platform. The expert advisor is capable of executing automated trading (i.e., trading on complete autopilot) and generating profits for its user (trader).
Trading robot is an automatic trading strategy
As noted earlier, every trading bot is built on a trading strategy devised by a human. The simplest example of a strategy is to buy when the asset's price has significantly decreased and sell when the price has significantly increased. The difference in price represents the profit. However, this is the most basic example, and in reality, any automated strategy has numerous additional conditions and is fully formalized.
In practice, trading bots utilize a variety of technical indicators that help accurately calculate local and global technical characteristics of the price dynamics of any market asset. Additionally, the rules of money management are clearly defined to effectively manage trading capital. There are also special filters that adjust the operation of the trading bot based on factors such as the spread size, slippage, volatility, trend direction, and so on.
As you understand, different traders come up with entirely different trading strategies. These strategies are described in a programming language, resulting in completely different trading bots that yield diverse trading outcomes. That's why every trader typically has several trading bots in their arsenal, allowing them to mitigate trading risks and diversify their trading results.
How much can you earn with automated trading?
Of course, the very first question for any novice user is how much can be earned through automated trading. To provide concrete evidence, let's present examples of profitability from trading bots that have been independently verified by MyFxbook, a third-party platform.
+ 15 498%, Profit in money: $15 810 709
+ 13 395%, Profit in money: $234 155
+ 592%, Profit in money: $592 350
On MyFxbook monitoring you can see the profitability of three different trading bots. As we wrote, different expert advisors give completely different trading results. Also, the size of the initial capital that the trader invested in the trading of the expert advisor matters. The higher the investment, the greater the profitability of the trading in monetary terms.
Trading operations
Expert advisors (trading bots) execute trading orders that are sent from the trading platform to the broker's server and then routed to the interbank market where they are executed. This path of a trading order (from inception to execution) takes fractions of a second. As we mentioned in the article on CFD contracts, trading capital is used to enter into a deals. However, the trading bot itself does not physically buy or sell anything. The transaction is based on the change in the asset's price and is referred to as a contract for difference.
Trading capital (trading deposit)
Certainly, to engage in automated trading on your trading platform, you need to have trading capital (deposit). This deposit is credited to your personal account on the broker's website. The MetaTrader trading platform connects to your trading account using a login and password. This way, the expert advisor gains the ability to utilize your capital for entering into CFD transactions on the interbank market.
Profit from automated trading
If a trade executed by the trading bot generates profit, it is instantly credited to your trading account and becomes yours. Consequently, the size of your trading account will gradually increase in this manner. You can withdraw funds from your trading account at any time, including the earned profit.
On the other hand, if the trading bot incurs a loss, it is deducted from your account. It follows a logical process.
The best automated trading software in our store:
