Automated CFD Trading

Automated CFD Trading

Automated CFD Trading Broker Comparison Table
Online BrokerMinimum DepositAutomated Trading PlatformsRegulated
$100MT4FCA, ASIC, DFSA, CIMA
$200MT4, cTraderFCA, ASIC
$100MT4, MT5CySEC
$50MT4FCA
$100MT4, JForexFCMC
$100MT4FCA

What Is CFD Automated Trading ?

A CFD is a Contract For Difference, which is a contract between the trader and the CFD provider based on the difference between the value of the CFD at the beginning and end of the trade. The value of the CFD is referenced to the value of an underlying market, thus a CFD allows the trader to trade a market based on its price movement, without having to own it. Some CFD providers offer online trading platforms which allow the trader to execute automated trading strategies. These are programs which execute trading strategies on behalf of the trader, trading CFD markets.

Different platforms may have different implementations of automated strategies, and may have use different languages. This matters because although the trader may simply wish to use automated strategies developed by others, they may also wish to implement them themselves, perhaps using a strategy they have developed or used when trading on their own behalf. Automated trading strategies are also called trading robots, which captures the sense of computer programs executing strategies on behalf of the trader.

Some factors to consider when thinking about using a robot is that while the strategy may work when backtested in the trading platform, it may not work when run on the real market. A trading robots will tirelessly and accurately and rapidly execute strategies but this can result in rapid accumulation of losses in the trader's account. The potential advantage of the human trader in that they can exercise trading discretion is absent from the trading robot and it will execute the program until stopped. This matters as trading market are complex and trading patterns which for example an indicator is looking for, may not have the expected outcome. When exercising their own discretion a human trader may be able to see this and take a different course of action in the way a computer program may not.

Programs can be altered to cover different contingencies, but this can result in a rule set or algorithm which is too complex. Both human traders and robots trade to some extent in the same way, they execute rules, perhaps based on an indicator, for example. But there is a spectrum of ways to deal with the market, covering the range from flexible to inflexible applications of the rules. The human trader has an advantage towards the flexible, the computer program has an advantage towards the inflexible. Inflexible can be an advantage as the human trader may exit from a trade which does work out, for many reasons, where a computer program will stay with it if programmed to do so. Therein is the disadvantage, if the trade does not work out.

It can be possible to adjust robots as they run, and this can help add back some of the advantages of human flexibility. Conversely, the trader who trades using their own discretion when to execute trades, may wish to consider automated trading as a way to tackle some times or market conditions or types of trades which they may find problematic and try to find a perhaps elusive harmony of human judgement and flexibility and machine precision and reliability.

More advanced algorithmic techniques may focus on areas which are not possible for the human to tackle, such as high frequency trading or use techniques such as machine learning to look for patterns in large complex data sets. However the typical trader will be using a robot which executes a strategy based on indicator signals, like what they would execute themselves, but with that potential advantage of tireless, unemotional execution.

The brokers in the table offer CFD trading on platforms which offer automated trading, namely MT4, its successor MT5, cTrader and JForex. MT4 and MT5 have automated trading strategies called Expert Advisors, frequently referred to as EAs. These can be used, modified or built in MQL4 for MT4 or MQL5 for MT5. cTrader has cBots, similar to EAs, and uses C#, and JForex utilises the JAVA programming language. Thus the trader may find a platform of interest because they may already know the language.

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