What Is Trading Software?
Understanding Trading Software
Essentially, automated trading software is a computer program that runs online autonomously and interacts with a variety of financial exchanges directly to place buy or sell orders. The software generally connects using Application Programming Interfaces (APIs) to retrieve and analyze relevant market information and to act on its interpretation of the data through specific algorithms.
- Trading software will usually analyze various market actions including trading volumes, numbers of orders, pricing of assets and timing, but can often also be pre-programmed to follow the trader’s preferences and risk-level.
- Trading software continues to grow in popularity among traders worldwide since it has the ability to find trading opportunities in the markets 24 hours a day, 7 days a week.
- Trading software never sleeps.
- In addition, trading software is able to do all the analysis for the trader, while still enabling the trader to stay in full control of their trading activities, at all times.
Additionally, a correctly programmed trading software platform allows for trades to be executed quickly and more efficiently than would be possible if traded manually.
Also known as trading robots or “bots,”, trading software is able to make trading decisions based on their algorithms and the monitoring of movements in the stock, cryptocurrency or forex markets. The software is also backed up by a set of predetermined rules or parameters, which have been entered by the trader.
- This ensures that if the software has been automated, it will only enter or exit trades that match the preferences as set out by the trader.
- Trading software is beneficial to both new and advanced traders and it enables new traders to learn about financial trading, while watching the software in action.
More experienced traders can use trading software to find and test potentially lucrative trading opportunities based on their trading parameters.
Accessing Trading Software
Despite being a popular choice in the financial markets and among large institutional investors, trading software used to be inaccessible to the average individual investor as they used to cost a lot of money.
Today, however, traders are able to access a wide range of trading software, each with their own unique features, pros and cons. In addition, some of the trading software is available free of charge.