How To Choose The Best Automated Trading System

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With automated trading becoming a growing trend, there is a large variety of automated trading systems available for the traders to choose from. How do you determine the best automated trading platform for trading?

Here are some essential points for you to keep in mind.

Data

One must know that a single automated platform doesn’t necessarily provide you access to data about all instruments. For instance, there are platforms exclusively committed to Equities trading and Forex trading within specific markets. Therefore, one needs to know what the automated trading system offers before choosing which to work with.

Also, take into consideration the frequency of data that will be required for your trading. This is advised because some of the strategies might require intraday trading data while others will require daily EOD data.

Back testing

Back testing is a historical simulation of the automated trading strategy used to determine how it would have performed on the past data. The results of a back test usually display the strategy’s performance in the lines of profits, losses, and some popular performance statistics.

Back tests can be divided into two categories- Event-driven back testing and research back testing. You need to take that into consideration while selecting a trading platform as a good back testing software will be a massive advantage for your trading.

Number of strategies allowed

Restrictions over the number of long or short strategies that can be loaded on a specific account. Therefore, if you need extra strategies, you might need to have multiple accounts. Also, since it is memory extensive, you will need to ensure that you have enough space in your computer for various accounts.

Therefore, it becomes an important criterion to investigate while deciding on the trading platform best suited for you. Some platforms offer you their own trading strategies as add-ons, which can be subscribed to and used on a periodic or one-time basis.

Complexity

Different ATPs will vary in ease of use. Some platforms require you to have expertise in programming to operate it, while others may not. To help you decide, almost all the platforms offer a demo version. Using a demo will help you understand if the particular platform fits your needs and level of expertise.

Keep in mind that the complexity of the platform will differ for different assets. Thus, it is also important to check the various features and tools that are available to analyze a particular asset class.

Programming languages

Choice of a programming language is one of the critical aspects to investigate while selecting an automated trading platform. This is important because different languages come with their own pros and cons. The most popularly used programming languages for trading are Java, C++, C#, Python, R, and MATLAB.

Java and C# both are great choices for developing a back tester as they have native GUI capabilities and fast execution speed. On the other hand, MATLAB also offers high execution speed but is quite expensive.