What is a stock exchange robot: operating principle, types, pros and cons, top 5 best

Evgeny Avrakhov, hedge fund Alteus, talks about how the business of traders who use trading robots to work on the stock exchange works.
According to the Bank of Russia, currently on the Moscow Exchange a significant trading volume (30-50% depending on the financial instrument) is generated by trading algorithms (robots). The influence of algorithmic trading on the market will only grow. The head of the company that manages the Alteus hedge fund told us about the structure of the HFT/Low latency trading market and its main trends.

Exchange robot: what is it?

A trading robot, in other words, a trading advisor, is an automated program that independently makes transactions on the stock exchange. Your task is to set certain parameters. For example, the moments of opening and closing positions, recording income, etc.

Exchange robots are used, for example, in the Forts, Forex and CME markets. They can be either fully automatic or semi-automatic. In the first case, no additional actions will be required from you during the work process. In the second, the program sends notifications about the transaction, the final decision in this case will be yours.

Warning about Forex and binary options

Despite the tempting nature of trading “binaries” and playing on the Forex currency market, it is worth remembering the main rule: the higher the expected percentage of earnings, the higher the risks. Unlike Forex, binary options are not at all controlled by the Central Bank, there is not a single mention of them in the legislation - fertile ground for scammers to work.

Work principles

Robots for making money on the stock exchange collect and analyze data on the state of the market. They calculate the outcome of the transaction and its profitability. The owner of the robot sets the parameters on which he relies when conducting operations manually. Thus, with the help of the operational work of the program, you can make dozens of transactions in one day.

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When a trading robot can be useful

If you are independently engaged in purchasing assets and building your portfolio, then a properly configured trading advisor can serve as an excellent assistant. However, the amount you have is important.

If your investment is at least a million, then using a trading bot will make sense. With a small investment, the robot will have nowhere to turn.

How popular and safe are trading robots?

The popularity of robots for trading on the stock exchange is growing inexorably. According to the Central Bank of the Russian Federation, in 2022, almost 50% of transactions on the Moscow Exchange were carried out using an automated program. About 80% of such transactions are abroad.

Deloitte predicts that machines will manage more than $16 trillion in assets by 2025.

All these operations are carried out by professional robots. Free models that are available to everyone on the Internet do not provide any guarantee of safety. As a rule, these are demo, “raw” versions of trading advisors.

EXCHANGE WORK - WHAT IS IT?

An exchange bot is a computer program with an installed trading algorithm, your assistant in the market. It is automated and trades independently on the exchange. You give it parameters - when to open or close a position, set a stop, take profit, etc.

Robots are used in such stock markets as FOREX, FORTS, CME. Works operate in two modes: automatic and semi-automatic.

By choosing the first mode, you simply watch his actions. The participation of a trader is not required here; everything happens according to a certain pre-established algorithm. But responsibility for the result of the auction still lies with the player who installed the program.

If you choose the second mode, then the bot’s function is to send a signal and recommendations for opening or closing a transaction. And you yourself must make a decision.

Pros and cons of automated trading

There are undeniable advantages and disadvantages in the work of stock exchange robots.

Pros:

• You don’t need to monitor the movements of the charts yourself. While you are minding your own business, the robot does everything for you;
• machines are not characterized by emotions, they know how to maintain composure in the most difficult situations;
• the program always follows the specified algorithm;
• The reaction speed of robots to market signals is instantaneous, which is not typical for humans.

Minuses:

• in an unusual situation, the robot may react incorrectly. There were cases when the program could not cope with sudden changes in the dollar exchange rate, and players lost their money;
• A robot for trading on the stock exchange is not a free pleasure. Along with the broker's commission for servicing the account, you must pay a subscription fee for using the automated program.

Classification of robots

The demands of specific market players are different, so manufacturers of robots for trading on the stock exchange produce models that meet different requirements. In accordance with the operating principles, dozens of types of programs are distinguished. I will briefly talk about the main ones.

Indicative

This is a traditional option for the game. It relies on fundamental analysis.

Non-indicator

This type of trading program is mainly used by experienced players. Martingale rules apply here, based on the fact that traders raise bets until they receive a win. Technical analysis is not used in this model.

News

The robot is programmed to search for key events from the news feed. It tries to predict market behavior by studying supply and demand. However, the player needs to select the optimal time periods himself.

Arbitration

This model does not use indicators and does not apply either fundamental or technical analysis. The basis of the game is the skill of the trader; he opens and closes positions based on price fluctuations.

Averaging

A robot model for trading on the stock exchange, which is based on making a transaction based on average indicators. There is no specific stop loss placed here. The advisor thinks through steps in the indicated direction, opens or completes operations.

Multicurrency

Some of the most expensive robots. The program analyzes the movement of various currency pairs and insures risks under contracts by hedging. Profit covers all losses, risks are minimized.

Trending

Trading on the stock exchange occurs on the principle of searching for trend lines. This stock trading robot is based on trend indicators.

Flat

The program trades on the stock exchange within a horizontal price corridor, which is calculated using oscillators. During trend periods, this model is ineffective.

Scalping

A stock trading robot opens short trades. The earnings for each of them may be insignificant, but the total income is very impressive. By the way, risk management considers this model the most dangerous.

What criteria should you use to choose a robot?

Transferring your capital to a robot for trading on the stock exchange is a responsible matter. First of all, familiarize yourself with its functionality, and also pay attention to the convenience and simplicity of the interface.

When choosing an advisor for trading, I advise you not to neglect the following points:

• testing the program on a demo account. This way you can determine the assistant’s profitability;
• using the robot in test mode for at least 2 months. Pay attention to the stability of the trading result on the stock exchange.
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• And study the advisor's trading strategy.

Rating of the best Forex robots

There are a large number of robot models on the exchange, and not one of them can provide a 100% break-even guarantee. Automated trading, just like manual trading, will always be accompanied by certain risks.

But it is still possible to identify the most successful programs that have clear advantages over others.

1. Funnel Trader. A free assistant for trading on the stock exchange, it is based on short-term operations. The principle of hedging is applied, with the help of which risks are not so high, and all processes are optimized. Works successfully at the Asian session.
2. Generic A-TLP. Robot scalper working on a flat strategy. Apply at night, after approximately 10 pm and before 3 pm. Before the release of economic news, the adviser is turned off. Used on a broker platform with a good reputation. Then the profitability from operations will be high.
3. Trio Dancer. The Martingale principle is used, so the risks are maximum. The assistant uses standard indicators. It is better if the market is entered without interruption, but this requires a paid server.
4. Equilibrium. Trend robot model, you can trade around the clock, sessions are short-term. Incomes are stable and risks are low.
5. Silent Ilan. Based on a grid strategy, uses basic indicators and the Martingale principle. 24-hour operation is desirable, which can provide constant analysis of entry points. The drawdown does not exceed 80%, and the number of successful operations is quite high.

Top manufacturers

When choosing a PR, special attention should be paid to its manufacturer. Only trusted companies guarantee the required quality and reliability. There are several top manufacturers.

Fanuc

Fanuc produces a wide range of robots for various purposes. An ideal option for industrial enterprises specializing in the production of small electronic devices is the FANUC M-1iA model. It has a flexible module that closely imitates the human hand. It is characterized by high accuracy and increased productivity. With a small carrying capacity, it is capable of providing various technological operations. The executive body has the shape of a hinged parallelogram, ensuring high-speed assembly of parts.

Hanwha

Among Hanwha's products, the collaborative industrial robot Hanwha HCR-5 cobot stands out. It belongs to the light-duty group. Can be used in the automotive, food and pharmaceutical industries, plastic processing and electronic device manufacturing. Has a hinged type manipulator. The robot reacts to external changes. Effective for warehousing and packaging, assembling and palletizing.

Hanwha HCR-5 Collaborative Robot

• Power supply 100-240 VAC, 50-60 Hz
• Dimensions, mm 450x560x225

• Working angle of rotation ±360°

• Weight, kg 20

• Protection class IP64

• Range 915 mm
• Maximum operating speed 1 m/sec
• Maximum spindle speed (rpm) 180°/sec
• Maximum operating radius 150 mm
• Payload, kg 5
• Working feed speed 1000 mm/s
• Degree of freedom 6
• Positioning accuracy ±0.1 mm

• Price RUB 2,205,537

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Kuka

The Kuka product line features the Kuka KR SCARA technological innovation. This is a highly efficient robot for assembling small structures, conducting tests, and during loading and unloading operations. The robot is light and miniature, with high performance. Belongs to the light-duty category. Capable of performing intellectual functions.

Universal Robots

The high-quality collaborative PR model UR 10 is offered by Universal Robots. The device has an average load capacity. It fits well with agricultural, pharmaceutical and process equipment. Its compactness allows it to be placed on a table. The model is popular for gluing, welding and soldering parts, casting and stamping.

UFactory

Among the new developments of the UFactory company, experts highlight the uArm Swift Pro robotic arm. The manipulator can easily be equipped with grippers of various designs, heads for volumetric printing, a laser engraver and other tools. This miniature robot can be used for household purposes. The device has high accuracy and good mobility. Easily switches to training mode.

Tabletop robotic manipulator UFACTORY uArm Swift Pro

• Dimensions, mm 150x140x281
• Housing material Aluminum

• Weight, kg 2.2

• Machining angles +90° to -90°, 0° to +130°, 0° to +106°, +90° to -90°

• Additional Tools: Suction Cup, Gripper, Universal Holder, 3D Printing Head, Laser, OpenMV
• Reach, mm 50-320
• Arduino Mega 2560 motherboard, open source
• Axles 4
• Repeatability 0.2 mm
• Lifting weight 500 g
• Working speed, mm/min 800
• Interfaces USB, Bluetooth 4

• Price 136,958 rub.

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Strategies for trading robots

Strategies for operating algorithms on the stock exchange are divided into dozens of types. For trading, players without experience can use the free version provided by brokers. Experienced traders prefer developments that are tailored to them individually.

Scalping

A short-term session is opened for trading on the stock exchange, which, as a rule, lasts no more than 30 minutes. Maximum price surges. An order is formed for one of the pair of currencies, take profit and stop loss are indicated. Most often they are based on Bollinger Bands.

Trending

Multifunctional stock trading tactics for different signals. Trading is carried out over long periods of time. Losses are quite possible, which is why bets are placed at the minimum level. The trend line is based on moving averages.

The trading advisor begins an operation when the price goes up or, conversely, down. Trading on reversals is possible. The accuracy of the forecast depends on the number of indicators that are taken for analysis. The more there are, the better.

Grid

Trading on the stock exchange is based on the formation of pending orders. They are formed through identical segments from the current price on the market of a financial instrument in different directions, both increasing and decreasing the value. This results in a so-called grid. Take profit and stop loss are a guarantee of a break-even transaction.

The grid strategy on the stock exchange is effective during strong trend fluctuations. During a flat period, trading is the most risky. Not all terminals have the ability to open multi-directional orders.

All in

Long-term strategy for trading on the stock exchange with maximum risk. Basic technical calculations are used, trading is based on the level of intuition without the use of indicators. Long-term directions are calculated, the order is formed on the expected rollback.

The analysis is carried out using a pure price chart. Basically, tactical signals operate based on take profit. Connection to the platform is optional.

Martingales

When trading, the program calculates unprofitable positions on the exchange and creates a double order in the same direction. The risks are maximum, but with a successful deal, players have the opportunity to compensate for all previous losses.

Universal trading robots take into account the possibility of market fluctuations. This reduces risks and adds security to the player. Stop losses are not used in this strategy.

Strategy based on the Parabolic SAR indicator

The robot for trading on the stock exchange is designed to minimize the reaction lag of the trading platform. The strategy works with clear dynamics of quotes. It is ineffective on the side.

To form a trend, players use moving averages and Bollinger bands. The advisor helps you determine the appropriate stop loss and take profit values.

Moving Average Crossover

This stock trading robot is easy to use. It is valid for various currency pairs during any trading period. The assistant has extensive settings for pending orders, inter-level differences, and price types.

A transaction on the stock exchange opens at the first intersection of the moving averages and ends at the second. In order for the robot to catch all clear signals, I advise you to ensure its operation without interruption.

Crossing of 2 indicator lines

The basis of trading on the stock exchange is the overlay of indicator lines on a price line or a chart of another index. At this time, orders are opened. The main line above the signal line means a good time to sell, and, conversely, if it is below, it’s time to buy. Trading is carried out according to the trend, reversal line or price corridor

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Does HFT benefit the market?

In general, the activities of algorithmic traders are useful in that they generate additional liquidity in the market - this is also recognized by the Bank of Russia. This means that all investors, even those who do not use robots, have more opportunities to earn money. However, during periods of sharp market movements, the activity of algorithmic traders can increase the negative consequences. Alteus strategies primarily create liquidity rather than take it away.

Thus, in 2012, the American market experienced an instant collapse of 20%, provoked by a trading robot. Later, already in 2018, experts associated market declines around the world with the work of trading algorithms. Then, within a few days, the markets could collapse more than once - as happened, for example, with the American Dow Jones: on February 5 it collapsed by 4.6%, and on February 8 it lost another 4.15%. In such situations, it is not the high-frequency traders who bear the greatest losses.

At the same time, market self-regulation helps ensure that only robots do not work in it. Everything is developing in a circle: an increase in market liquidity and efficiency leads to an increase in the number of algorithmic traders, which entails a decrease in the profitability of their operations. At the same time, costs (for example, on technology and equipment) continue to grow, which means that soon working in the Low latency trading niche will become unprofitable for many traders. As a result, there will be fewer of them, and market inefficiencies will again arise that can be exploited, which will again lead to the development of this segment. It is very difficult not to fly out of the market at the next turn; for this you need to work very hard and look for new niches.

For example, as competition becomes increasingly fierce, and at the same time the volatility of financial markets decreases, the following trend has emerged: algorithmic strategies are beginning to be actively used in cryptocurrencies, where volatility is still in order.

Cost of paid stock exchange robots

The popularity of artificial intelligence for trading on the stock exchange is gaining momentum, so prices are set accordingly. The most inexpensive trading advisor can be purchased for $50. However, the higher the quality of the strategy included in the program, the higher the cost. The price also depends on the set of filters.

Thus, a trend type of robot brings a profit of 5 to 10%; it can be purchased in the range from 6,000 to 50,000 rubles. A more profitable model is flat: income ranges from 10 to 35%. The price varies from 15,000 to 100,000 rubles. But the two-way type of advisor is effective in different periods. Here the yield can reach 50%, and its cost is from 25,000 to 150,000 rubles.

Prospects for use

The development of industrial robotics is expected in the direction of introducing artificial intelligence. Such robots will be able to completely replace humans in a number of areas, saving them from hard physical and monotonous labor. In the Russian Federation, areas where the use of PR is most promising have been identified:

1. Manufacturing industry. Particular attention is paid to domestic manufacturers: Aripix Robotics, BID Technologies, Bitrobotics, Hamster Robotics, AvangardPLAST, Android Technology, JSC NPO NIIIP-NZIK, ARKODIM-Pro, Norma IS, Robotech Systems, “Russian robots”, “Eidos-Robotics”.
2. Construction and dismantling of structures. In this direction, the emphasis is on the products of the companies Intekhros and FlyBrick.
3. Agriculture. Promising models are offered by Russian robot manufacturers: Agro Robotic Systems, Avrora Robotics, Agropolis, Cognitive Technologies, R.SERT, UrFU, YURGI, GEOSKAN, Central Research Institute of RTK.
4. Mining industry. VIST Mining Technologies (VIST Group) and GEOSKAN offer their promising products. There are already models for working in hard-to-reach areas.

Industrial robots have already proven their high efficiency. Initial costs quickly pay off due to high labor productivity and product quality. Promising developments with artificial intelligence are further expanding the capabilities of robotics.

• December 19, 2020
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How to install and connect

It is important not only to choose the right robot for trading on the stock exchange, but also to connect it correctly. How to do it?

1. Loading the assistant. The folder with the installation files is located on the main site. There is a robot and settings for it.
2. Installation. Download the archive and install it on the trading platform. Here you need to act according to standard tips. All component folders are copied and transferred to the software package. The robot is installed, but you still need to go through the activation procedure.

3. Joining the schedule. To update the data, you need to restart the terminal. Then check the box next to permission for automatic trading and drag the assistant onto the chart.

4. Advisor adjustment stage. Before starting to trade, the player adapts the system to the active strategy by setting up the program. If necessary, load the robot's input data. To respond correctly to market movements, do not forget to adjust your strategy from time to time.
5. Beginning of work. If everything was done correctly earlier, a “work” icon and a smiley face will appear in the upper right corner. Before the robot starts trading, you need to wait for all the preset data of a profitable operation to match.

It is important to remember that the robot only works when the terminal is turned on. I also highly recommend testing the program on a demo account.

Top brokers that allow robot trading

Not all brokers are ready to allow their clients to use trading advisors. What is this connected with? I think that they are simply afraid of losing to a trader and missing out on their earnings.

However, some large intermediaries, on the contrary, offer special programs to players on the exchange to increase their own rating. I will give an overview of the best brokers where you can trade using a robot.

1. Forex Club. It has been providing its services for trading on the stock exchange for more than two decades. Registration is free and does not take much time. Here you can take advantage of an individual training system, as well as the services of a trading advisor. For long-time customers - bonuses and the opportunity to participate in promotions. A trader can choose a program to his liking and install it on the platform.

2. RoboForex. The broker offers ready-made trading assistants and algorithms for developing individual models. Spreads on transactions are minimal. Those who have no experience can try working on micro accounts with a small deposit.
3. InstaForex. One of the obvious advantages is the availability of a license and the absence of a minimum deposit. You can trade at any time. Beginners can use a demo account.
4. FXstart. Instant registration and bonuses for replenishing your account, which, by the way, are offered by most brokers. They talk about how to work with an advisor and the trading platform itself at regular webinars. There is a demo account.
5. AMarkets. Provides a broad overview of robots for trading on the stock exchange. It is possible to download an archive of chart movements and view the testing of advisors. Bonuses for depositing money into your account.
6. NordFX. It is possible to view current analytics. Relatively small transaction fees are charged and leverage is available. The broker is actively working with robots and is implementing the “Signals” automatic trading program.