Forex Trading Software Comparison
Algorithmic trading is offered by various forex brokers, allowing robots to execute automated trading strategies in the forex market. Automated trading programs have become incredibly popular in the retail foreign exchange space through three mainstream trading programs:
- MetaTrader’s Expert Advisors
- cTrader’s cAlgo
- IG Market’s Pro-Order
The best automated forex trading tools for 2020 are explained in detail below.
The Best Automated Forex Trading Software in 2020
Based on popularity the best forex trading programs for 2020 are:
1) Expert Advisors (MetaTrader)
Worldwide, MetaTrader 4 is viewed as the gold standard and best forex trading platform available.
The reason Pepperstone is seen to offer the best algorithmic trading programs is the choice of robots available in the MetaTrader Market. MetaTrader’s marketplace allows robots (called Expert Advisors) to be purchased or rented. There are over 1,700 forex trading robots and 2,100 technical indicators (some of which are free).
The diversity of expert advisors is not the only reason for MetaTrader’s popularity, it’s also the fact you can test them prior to purchase. This is through demo versions of MT4. Bots can also be run through a forex VPS allowing for 24 hour a day trading.
2) cAlgo (cTrader)
cTrader is the second most popular forex trading platform and is often the preferred choice from advanced forex traders. We recommend IC Markets for those considering trading forex on the cTrader platform.
cAlgo, cTraders algorithmic program, allows forex traders to build their own custom technical indicators and robots (known as cBots) utilising the modern C# API. C# is one of the most common programming languages, due to being readable by traders and easy to use. Code can be written using cAlgo’s code editor or Visual Studio. These bots can be backtested on historical data generating detailed logs, loss and profit reports.
Similar to the MetaTrader Market, cTrader has the cTDN Marketplace where you can download bots based on popularity, performance and rating. The screenshot below shows these bots within the cTDN marketplace.
3) Pro-Order By ProRealTime
ProRealTime is a platform promoted by IG which also offers the two forex trading platforms discussed above. You can view the full details in our IG forex Review.
The automated trading software solution IG Markets provide is called Pro-Order. The tool is designed for forex traders to create their own strategies from scratch, or alternatively by using their assisted creation tools. Strategies can also be adopted from third-parties. All of these robots can then be back-tested for free against up to 30 years of historical data.
ProRealTime (part of ProOrder) costs traders $40 per month. If over three transactions are made that month, the fee is refunded into the traders’ forex account.
It’s worth considering these elements when creating your own automated strategies:
a) Code quality
The complexity of the indicators utilised can increase the time required to calculate and execute the order. Programming loops and complexity can decrease performance and increase latency when trading.
b) Money management
When backtesting forex trading software and strategies, results will be impacted by money management strategies. As profit/loss calculations are based on transaction costs these should be considered.
c) Manual And Automated Combination Trading
When an automated forex software robot is active, manual trades can still be made through ProRealTime. These can close or force open new positions which should be considered.
Auto Trading Software Explained
Foreign exchange trading has grown in Australia but a key issue is the time required to watch and analyse the market. Time-scarce and sophisticated traders have created robots (bots) themselves or share them between traders.
What Is A Forex Robot?
Forex robots are algorithmic programs designed for automated trading. Based on indicators, they analyse if a trader should buy or sell certain currency pairings. There is no ‘human factor’ with bots, which some investors feel is an advantage and they can be the first to trade based on movements. Generally, robots can execute trades on behalf of the user, even if the forex trading platform isn’t switched on.
Forex robots can be found on currency forums, through some forex brokers and specific websites. It should be noted that robots can’t guarantee a trader results and past-performance doesn’t always indicate future performance. Examples of forex robots include FRT, Golem and Trading Manager Pro. Compare Forex Brokers doesn’t recommend these providers, they are included purely as examples.
How Do Robots Work In Currency Markets?
Robots are created by humans who program trading strategies with a set of mathematical rules. The robots then execute directions (buy and sell) for currency pairs based on market conditions which trigger their technical analysis tool.
As robots are manmade, their success depends on the programmer, the logic they apply, and if the market conditions meet the logic. Programmers will often backtest the robot they create to see how it performs in past market conditions against historical data. This is often how a robot is evaluated by other traders who are considering employing the robot. Additionally, there are additional tools the robot utilises such as stop-loss order functionality to help manage trades and risk
Why Use Foreign Exchange Robots?
As discussed earlier, robots do not require the trader to constantly monitor the market. This can mean more trades can be made and at faster execution rates, during all hours of the day. Trades are also based on computer logic rather than human emotion which can be both positive and negative.
Why Not Use Foreign Exchange Robots?
The simplest answer is risk. There is risk in the forms of scams where individuals or companies claim they will guarantee results. Like choosing the right forex broker, its just as important to find a robot provider with a strong reputation. Robots also account for risk differently compared to a human, so they may trade in conditions that some individual traders would usually avoid.
How Can Traders Compare Bots?
- Knowing The Currency Pairing Traded: It’s important to know what pairings a robot will trade and to make sure you’re confident in those. Australian forex traders often will prefer pairings with AUD in the mix.
- Past Profits: Forex robots will often post their past net profits with some also show what their performance would have been based on back-dated data. It’s worth looking at both small and large time-periods factoring in all trading elements to find the right robot.
- Quantity Of Trading – Robots rarely have a single strategy. Rather they have a number of elements suitable for different market scenarios. It’s important to know the number of strategies to find one that matches your risk profile.
More About MetaTrader 4 and MetaTrader 5
There are thousands of traders of all levels of experience who would not consider using any other trading platform outside of MetaTrader platforms. Forex brokers license this software from the developer, MetaQuotes Software. Brokers sometimes tweak the software, but for the most part, brokers offer it as is to provide clients with live streams of currency prices and charts, real time data and news, account management functions and the ability to place orders and manage trades. Both MetaTrader versions are based on the Windows operating system, making it easy for Windows users to get up to speed quickly with Forex trading, at least in as far as the Forex software is concerned. Some brokers have customised MetaTrader to be compatible with the Mac operating system. Most brokers have developed mobile-friendly versions of MetaTrader compatible with both iOS and Android devices.
The primary appeal to forex traders using MetaTrader is the ability to write trading scripts and forex robots (Expert Advisors) to automate the entire trading process. This ability is particularly valuable to traders who live in time zones well beyond the zones where most trading takes place.
MetaTrader 4 (MT4) has been around since 2005 with MetaTrader 5 (MT5) introduced in 2010. MT5 has not become close to supplanting MetaTrader 4 in terms of the number of brokers offering this software or the number of traders. MetaTrader 5 has generally received favourable reviews, but it seems to be a case of providers and users deciding that a reinvention of the wheel was not needed.
One of the primary reasons that MetaQuotes Software released MetaTrader 5 was to provide access to financial markets beyond those that could be traded on MetaTrader 4. For a Forex trader, this is a moot point. Another reason was the no hedging rule that the main U.S. regulatory body, the National Futures Association (NFA) placed on the currency markets to prevent traders from being long and short in a currency pair at the same time. Traders quickly learned a simple workaround to the no hedging rule, which was to have sub-accounts where they could be long and short simultaneously without running afoul of the NFA.
The conclusion regarding MetaTrader trading software is that it is fast, stable and fairly easy to learn. This allows traders to concentrate their energy on trade setups, trade entry, trade management and trade exit as opposed to managing software.
More About The cTrader Forex Trading Platform
The first and most important factor traders need to know regarding cTrader forex software is that the platform is designed to facilitate Straight Through Processing (STP) trading. This means that buy and sell orders for currency pairs are routed straight to the currency markets via an Electronic Communications Network (ECN). For traders, that mouthful of forex jargon simply means that the trader’s Forex broker does not handle the order at a dealing desk, where the broker could change the price quotes to the broker’s advantage. Avoiding a broker dealing desk is paramount to gain access to fast execution and ECN-like spreads, but it is mostly a matter of broker selection.
cTrader was designed by a company called Spotware. This software is still dwarfed by MetaTrader for the number of brokers and traders using it, but it is growing in adoption as the growth of automated trading makes its strengths apparent. One of those is the intuitive nature of the platform that makes using it so simple. Spotware has made continuous upgrades and enhancements to cTrader and users who have switched from other platforms enjoy a larger charting area with access to more trading tools and indicators. Traders interested in automated trading use the equivalent of MetaTrader’s Expert Advisors, a system called “Calgo,” which stands for c-algorithm.
cTrader is also valuable to traders who prefer manual trading and do not wish to devote the time to developing forex trading robots and algorithms. As far as a comparison between these two forex software platforms, cTrader has an innovative Depth of Market feature that enables traders to make trading decisions based on three different depth of market criteria, which is valuable for understanding market liquidity, more precise trade entries and the ability to anticipate the buy/sell spreads for brokers that use dynamic spreads for their quotes. cTrader also has versions for Mac and mobile devices of all types.
Traders who change forex brokers, and many do change, will benefit from both these platforms because these platforms go with the trader, meaning that changing brokers will not require traders to learn new forex software. Beyond that, the choice is mainly one of preference and many traders gladly use both platforms with very little disruption when switching between the two. View our forex trading platform page to find the right platform and forex broker for your needs.