Broker to Trading

Some traders may wish to use computer programs to trade on their behalf, automatically executing trading strategies programmed as a set of rules (or algorithms). Some brokers do not support automated trading, but some do. MT4 is a platform which supports automated trading strategies.

But not all brokers offering Bitcoin trading provide this platform. The brokers in the table do offer MT4 Bitcoin trading, and some may provide other platforms supporting automated trading, for example MT5, cTrader and JForex.

All these brokers offer Bitcoin CFD trading or in some cases in the UK spread betting. In Bitcoin CFD trading and spread betting, the trader does not own any Bitcoin when trading it and does not need a wallet or to trade on exchanges and can use leverage. Some of these brokers may also offer Bitcoin CFD trading on web traders which do not support algorithmic trading.

What is algorithmic trading ?

As its name suggests it is trading markets using algorithms executed in computer programs on trading platforms. Algorithms are sets of rules. Traders may actually trade on their own behalf and follow rules, for example relying on an indicator and market conditions to enter, manage a trade and exit. However they may find that they cannot devote the time to do this or may find that trading day in and day out becomes tiring, for example. So these rules can be codified as a computer programs.

MT4 and MT5 provide what are called Expert Advisors. These are algorithms which will execute trading strategies and can be used, modified or created by the trader. The cTrader platform has cBots, which are also automated trading strategies. Thus on the platforms in the broker comparison table, the trader can apply automated trading strategies to Bitcoin CFDs, using robots already created or make their own (though this requires an understanding of the language used to program the robots).

The names robots, algorithmic trading and automated trading all refer to the same thing (though robots refers in particular to the computer programs executing the trades). The difference is that algorithmic trading may be used to refer to large scale trading used by institutions, but it is in effect the same thing, just on a much bigger scale and scope than the typical trader. However brokers can provide institutional grade infrastructure to the trader, particularly ECN brokers, allowing high speed order execution. If the trader wishes to trade algos at larger volumes and scale, they may wish to consider such a broker.

Automated trading can result in drawdown or losses, as the computer simply follows rules and does not exercise discretion like the human trader, even if the trade works out in the end. The trader may find that they need to adjust strategies. It is important to note that while a strategy can be backtested, because it worked in the past does not mean it will work in the future.

The trader can trade with algorithms with their computer connected, but this means that connection problems may disrupt the trade. So as a further step they can use a Virtual Private Server (VPS). This is a computer which hosts the algorithms and runs them 24/7.