Automated Trading – can it really make money?

There have been various positive developments in crypto and Forex trading, and one of the most popular tools used by individual investors is automated trading platforms or automated trading software. Multiple technology providers and traditional retail brokers have been innovating this space, and today you can find several exciting solutions that both beginner and experienced traders can adopt. Our team at EthereumTrading.pro have produced several reviews of the most popular automated trading platforms and automated trading software solutions available on the market today.

This article will explain the difference between a computerised trading platform and automated trading software. We will also cover their main features and explain how they work to make your judgement on which option to use if you want to invest and buy Bitcoin or other altcoins using auto-trading. 

What is Automated Trading? 

Both automated trading platforms and automated trading software work on the same principle. However, the main difference is that automated trading software mainly focuses on generating trading signals. In contrast, an automated trading platform combines analytical tools (and trading signals) and a trading platform. They allow investors to automatically execute trades on a pre-built automated strategy (algorithm)  usually developed using programming languages.

Automated trading platforms have been popular among individual investors, especially those trading forex, for many years and has recently been adopted to invest in digital assets. Automated trading is essentially a computer algorithm that analyses the market using technical analysis and makes short-term price move predictions. The program then automatically executes trade orders to the broker or other trading venues and runs buy and sell trades. Such trading algorithms use technical indicators such as the Relative Strength Index, Money Flow Index, Stochastics, MACD and Bollinger Bands and others to predict short term-price moves.

Trading positions remain open for a short time, ranging from seconds to minutes, and trades are closed once profit target or stop-loss have triggered. The automated trading platform aims to make many small trades aiming to have, on average, more winning trades than losing ones. 

With the automated trading platform, you can start auto-trading and don’t have to sit in front of your computer all the time. You can also take advantage of top-performance strategies developed by other experienced investors by copying or following their trades. Automated trading strategies proved to be quite profitable as well, where on average, you can expect to generate 3-5% in daily profits or between 40 to 60% return on your capital per month. Of course, that can be considerably more if you are using leverage, but we will discuss this in more detail later on.  

So, first, let us explain the difference between the automated trading platform and automated trading software and the pros and cons of each. 

How Automated Trading works? 

As we explained before, automated trading is essentially a computer algorithm that runs trading operations for you. It consists of two main components, the trading algorithm itself and trading execution. So the automated trading platform combines the two and is usually operated by the brokers. 

Some of the most popular automated trading platforms (also known as crypto trading robots) are Bitcoin Revolution, Bitcoin Evolution, Etehreum Code, Bitcoin Code and several others covered in a series of independent reviews. 

These crypto robots offer an automated trading platform that executes a proprietary built-in automated strategy/algorithm that runs on a CFD broker platform. Such strategies are black-box, which means you don’t know which signals they use to protect the know-how, so other competitors can’t simply copy them. As such automated trading platforms work with some of the best CFD Brokers, they are free to use, and you only pay trade-related costs associated with the broker.

Usually, CFD brokers don’t charge trading commissions, and you only pay a spread, which is the difference between Bid and Ask price. Moreover, the spreads are usually relatively low for liquid assets and cryptos, so your overall trading costs are not high. Examples of some of the best CFD brokers would be AvaTrade, FOREX.com or eToro, but we also covered many others in our CFD broker review series. Most of these brokers also offer Forex trading in traditional currency pairs.

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What is Automated Trading Platform? 

The way automated trading platforms work is straightforward. First, you need to open a free account, and this is usually a straightforward process. Once you open a free account, you will automatically get an account with an affiliated CFD broker, so you don’t have to do that twice. Most crypto robots offer a free demo account where you can test-drive their automated strategy risk-free with virtual cash before starting live trading. Many beginner crypto investors find it extremely useful to familiarise themselves with how an automated trading system operates without risking any money.  

Once you get comfortable with the platform interface and understand how it works, you will need to deposit funds with the broker to start trading. As financial authorities regulate brokers in their respective jurisdictions, you will need to complete the Know Your Client process by submitting a copy of your passport and proof of address. That is a standard process for all financial institutions that deal with clients’ money, and thanks to advanced technology, they can complete it in minutes. 

To deposit the funds, you can use one of the popular payment methods such as debit or credit card, bank transfer, PayPal or a handful of other payment options available. While the bank transfer can take up to a few days, if you use a debit or credit card, the funds can be available in your broker account in a matter of minutes. 

Once the funds land on your account, you are ready to start trading, but first, you will need to set the parameters for your trading strategy. Most of the popular automated trading platforms provide integration with market data providers. You can set your targets such as trade size, profit per trade and daily profit targets, trailing stops, as well as stop-loss per trade and daily stop-loss. The last two are especially important to make sure you manage your risk correctly. Once these parameters are defined, you can start trading and make money. In addition, you will be able to monitor in real-time your trading positions and profits and loss for each automatically executed trade once it has been closed.

You can do that via a web-based interface, and most of the popular automated trading platforms offer mobile apps so you can stay on top of the game wherever you are. You will also have an option to intervene manually and stop auto-trading whenever you wish or resume it if you want to start auto-trading again, so you have complete control of it. 

As we mentioned, such automated trading systems are ideally suited for beginner investors who don’t have extensive trading experience or technical knowledge of trade signals. In addition, you can start investing with as little as $10 per trade, and minimum deposits usually start at $100. 

What is Automated Trading Software? 

Automated trading software is usually more sophisticated and can be web-based, or you can download it on your desktop as a platform. Unfortunately, it also doesn’t have a built-in trading capability, and you will need to connect it to the crypto exchange or another broker via an API. That can be an obstacle for less tech-savvy investors; most of them provide comprehensive manuals and user guides.  One of the most popular automated trading software is HaasBot, also known as HaasOnline. It offers automated trading software that includes HaasOnline Trade Service, HaasOnline Cloud and HaasScript.

While HaasBot is designed for experienced traders with at least some level of market knowledge, beginner traders can learn very quickly to use it, thanks to a comprehensive library of educational resources. HaasOnline allows to quickly develop, backtest and deploy high-frequency crypto trade bots across a wide range of some of the best crypto exchanges and analyse the market data and historical prices of different cryptos. 

So with automated trading software, you first need to design an automated strategy of your own by using technical signals and indicators and other parameters such as trade size, profit target, trailing stop, stop-loss and others. You can also use pre-built auto-trading strategies developed by others and implement them on your own. You can also back-test them to see what the historical performance could have been in the actual market conditions and tweak the automated strategy accordingly to maximise the returns.

Usually, automated trading software works with crypto exchanges via API connectivity. If you have good enough technical skills, you can connect it on your own, or you can use the help of a support team at a separate fee. Automated trading software can also analyse the market data you can receive from the crypto exchange or an independent market data feed. 

It is essential to mention that automated trading software is usually priced at a one-off fee or a subscription. The reason for that is that developers are not affiliated with any trading venue and are independent. You will also have to pay trading-related costs, which will depend on the crypto exchange, but if you use a professional venue such as Coinbase Pro, for example, the trading fees would be pretty low. While the initial cost might put some users away, we think that a reliable automated trading software like HaasOnline, for example, is definitely worth paying for if you are serious about learning automated trading and investing in financial products.

The small initial investment will pay off if you are committed to starting auto-trading and use it. But of course, if you want to try it out, the free automated trading platform such as the Bitcoin Revolution, for example, might be the best place to start.  So, now we know the difference between the automated trading platform and automated trading software and the pros and cons of each of them. The following substantial question we will try to answer is what investment returns you can get. 

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Can I make money with the automated trading? 

In the fast-paced world of cryptocurrency trading, it is challenging to trade on your own. The price of major cryptos such as Bitcoin can be highly volatile, with daily moves up to 20%. Therefore it can be challenging to monitor the trades, and it is much better to have the computer program do that for you. It is essential to mention that traditional investment houses and experienced traders have actively used automated trading. Today, about 70-80% of global trading volume across all markets is done by computers or institutions that deploy quant or systematic investing. 

But what about automated trading platforms & software that are available for individual investors? 

While the performance of such platforms and their auto-trading strategies can vary dramatically, it reported that the best crypto trading robots could generate on average up to 50-60% profit per month. And when using leverage, the returns can be as high as 200-300% in monthly profits. While leverage can significantly increase your return on capital, we only recommend that to experienced and seasoned investors. If the trade goes against you, your losses can magnify as well. 

We think that if you trade responsibly and manage your risk correctly using a trailing stop, stop-loss and other similar features,  you can reasonably expect to make at least 40% profit per month. Of course, you won’t be able to make money on every single trade, and some will result in loss, but you only need to have more winning trades than losing ones on average to make money. Even 2-4% in daily profit can result in a substantial return each month. You won’t achieve such earnings in forex trading as prices of traditional fiat currencies are not as volatile. 

If you are interested to learn more about different automated trading platforms or automated trading software, we have a series of in-depth reviews covering individual providers. We also provide our readers with an unbiased opinion of each platform so you can choose the one that suits your needs the most. 

Also, if you are interested to learn about an automated trading platform that we have not covered, please reach out to us to express your interest, and we make sure that someone from our team looks into making such a review. 

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