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Traders constantly improve their automated

strategies: they make changes in their
algorithms, optimize them, and add new lters;
they also buy different trading strategies from
third-party developers and make a strategies
portfolio; sometimes they rent trading
strategies from third-party developers and make
a portfolio. The notion rent implies not only
monthly payment for using a trading robot but
also subscription to signals or membership in
social trading networks.
There are certainly many ways for traders to
attain their trading goals. But there are three
popular methods advanced and less experience
traders can use to leverage an automated signal
copier.
USING AN AUTOMATED SYSTEM
DEVELOPED BY A THIRD PARTY
This is the easiest path towards trade
automation, as it entails copying a trading
system created by a third party. This is also a
potentially protable method and it is common
to see many public trading systems consistently
posting protable statements. Even then, the
contentious issue with these systems is the lack
of certainty that the third party developer has
created a program that will not constantly lose
you money. This is one of the major reasons
why many a trader is hesitant to use third party
automated trading robots.
Ideally, traders should look out for systems that
come with a clear description of the strategy
how it works, whether it trades ranges or
trends, whether the strategy is long term,
medium or short term, what the win rate is and
what risk and reward ratio the system offers.
The more information the third party developer
offers, the better the trader will be at choosing
an appropriate trading robot.
Of the many trading programs on the market,
many are of superior quality, but few are
inadequate with scarce benets and features,
especially for the beginning trader. Many
providers of third party automated signal
New models and
methodologies:
taking your automated
FX trading to the next level
Popularity of automated trading systems has been
constantly growing throughout the years. On the one hand,
the reason of such popularity is that an automated trading
system allows a trader to generate more trades (a robot
allows to analyze more trading instruments and timeframes
simultaneously) and excludes the psychological factor when
making decisions. On the other hand, automated trading
is popularized by brokerage companies and developers of
trading platforms and trading systems.
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AUTOMATED FX TRADING
Boris Fesenko
By Boris Fesenko, BJF Trading Group, Inc.
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copiers claim more than a 95
percent winning rate. Even then,
the most viable programs provide a
certied trading history to reveal the
effectiveness of the trading system.
However, protable prot/loss
statements do not guarantee future
results with any given system.
WORKING WITH AN
ADJUSTABLE TRADING
STRATEGY
This method of automated trading
is more difcult than just copying a
third party trading system. Traders
who are looking for a trading
system that works efciently but
can be improved upon will typically
gravitate towards this method.
Sometimes, a strategy might have
great entry logic but a trader might
want to change stop-limit levels
used in a specic strategy. At other
times, a trader may also opt to
change the moving average to a
level that they are more at ease
with.
A lot of public strategies are
customizable from the sub-account,
allowing the trader to adjust
features such as currency pairs,
stop-limit levels, indicator settings,
among other parameters. It is
recommended to backtest third
party strategies for optimal results.
Well-known automated trading
programs are compatible with all
major currencies. The pairs that
demonstrate the greatest liquidity
include USD/JPY, USD/EUR, USD/
GBP and USD/CHF. Regardless of
the currency pairs utilized, trading
strategies differ greatly ranging from
risk-averse systems that are designed
to scalp a couple of points, to more
risk-prone strategies. Traders can
adjust the baseline strategies and
keep those that work for them.
Whether you use a fully third-party
system or a customizable program,
your needs as a trader is an
important consideration. Needs such
as ease of use, programmability,
functionality, and speed are essential
considerations. Intermediate or
advanced traders may prefer a
system that features market specic
orders, trailing stops etc. On the
other hand, beginner traders may
only require an easy to use program
that they can just plug in and
play without much input from the
operator.
ESTABLISHING YOUR OWN
AUTOMATED TRADING
SYSTEM
A commendable way to leverage
your own winning strategy is to
automate it so you can apply it
around the clock on all similar
trades. Obviously, creating a trading
system from scratch is difcult and
time-consuming but if your system
is able to generate prots, then the
resources spent will be offset. A
good number of traders often use
the services of a programmer to
create an automated trading system
that automatically trades for them.
When creating your own automated
trading system, it is recommendable
to factor in the issue of remote
accessibility. Traders who travel
frequently should work with
a program that permits easy
functionality and access from any
location. Web-based systems are
ideally suited for roaming traders.
Virtual Private Server hosting
provides super fast access to the
program and isolates the trading
system for security purposes.
Social trading networks or signals
copiers can be organized within
the bounds of a single Forex broker
or be multi-broker. Realization of
copying within the bounds of a
single broker is done on a server-
based or manager-based API. The
advantages of such copying are
high copying speed and absence of
necessity to keep a trading platform
launched. The only shortcoming is
limitedness of a system by a single
broker. Multi-broker copying can be
organized on Forex expert advisors
or scripts.
There are several things to pay
attention to when choosing a
New models and methodologies
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A good number
of traders often
use the services
of a programmer
to create an
automated
trading system
that automatically
trades for them.
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trading system for copying. As a
rule, there should be the parameter
Duration in any social trading
network. If a trade lasts lesser than
one second or several seconds,
its more than likely that problems
will occur during copying. A delay
between order opening time on a
master-account and a sub-account
depends on master-broker execution
time, internal delay of a signals
copier and sub-account execution
time. Many scalping strategies
can be destroyed by 100-200ms
delay, but even 10-20ms delay is
signicant for several systems, for
example, spike-trading systems.
A technology of order interception
on the stage of sending an order
from a terminal to a master-account
server (stp add-on) is used in some
copiers for scalping strategies
copying, but even in this case the
results on a master-account and
a sub-account may be slightly
different due to master-account
and sub-account execution time
difference.
TESTS
We conducted a series of scalping
strategy copying tests using orders
interception and standard copying
methods. First of all, we measured
ping between our VPS server located
in Germany and a broker server.
Ping average value is 100ms. It
is a signicant delay and I would
recommend choosing servers near
the broker server or even servers
located at the same data center (30-
50ms) when working with scalping
strategies.
The next step was to measure orders
opening delays. There are several
stages between you pressing a
button or an expert advisor sending
an open order command and actual
order opening:
1. A trader or a robot initiates
order opening on a terminal;
2. An order is transmitted to a
server via internet;
3. The server accepts the order;
4. The server sends a request
to a liquidity provider via the
bridge and internet;
5. The liquidity provider
approves opening via internet
and the bridge;
6. The order is opened on the
server;
7. Order opening conrmation
is sent to the terminal via
internet.
We received the following delay
values:
1. The delay between the stages
1 and 2 is almost 0;
2. The delay between the stages
2 and 3 is 50ms;
3. The delay between the stages
3 and 6 is 40ms. This delay
depends on technological
solutions of a broker. The
delay may be signicantly
higher if there is no cross-
connection between a
liquidity provider and a broker
server.
4. The delay between the stages
6 and 7 is 50ms.
I.e. the full cycle of order opening
on a master-account took 140ms.
When copying an order to a
sub-account of the same broker
without interception, the order
will go through the same 7 stages
and the difference between order
opening time on a master-account
and a sub-account will be 140ms.
Price may change for several points
during this time. When using
interception systems (stp add-ons),
an order is intercepted on the stage
1. If a master-account and a sub-
account are at the same broker, the
delay between order opening on a
master-account and a sub-account
is 0. If accounts are opened at
different brokers, a small delay or
lead (an order will be opened on
a sub-account before opening on
a master-account) is possible. It is
believed that delay does not have
signicant inuence on copying
results in case of a large number of
orders because price changes that
both reduce and increase prot may
occur during delay. It is a wrong
opinion. Delay will almost always
have a negative effect on a strategy
when copying scalping strategies.
It is also possible to copy an order
from a small drawdown. Lets say, if
New models and methodologies
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Many scalping strategies can be destroyed by 100-
200ms delay, but even 10-20ms delay is signicant for
several systems, for example, spike-trading systems.
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a copying system allows adjusting a
lter to open an order on a sub-
account with 2-3 points drawdown,
such approach will allow to
compensate losses caused by order
closing delays and get sub-account
results similar to master-account
results. On the other hand, some
orders opened on a master-account
wont be copied to a sub-account
if price moves to the predicted
direction right away.
You should analyze historical
data and choose lter values (i.e.
drawdown values) in such a way
that the number of missed orders
wouldnt exceed 3-8% from the
total number of orders. When
copying multi-currency orders,
copying from a master account
where several systems (robots)
operate, or copying from several
master-accounts, it is necessary to
analyze each currency and strategy.
A copier may have built-in lters
on a currency pair, magic number,
comments. Such lters allow
forbidding copying on undesirable
currencies and exclude a strategy
that does not meet your criteria
from copying. Filters and orders
interception systems are usually not
used when copying in social trading
networks, but only in trading
copiers.
If a master-account and a sub-
account are opened at different
brokers, you should compare
spreads and delays during operation
of a strategy.
The most effective method is to
copy strategies that use pending
orders. Only in this case you can
reach full correspondence of
opening and closing price on a
master-account and a sub-account.
The next stage of preparation to
the copying process is calculation
and adjustment of risk and a lot
scaling method on a sub-account. In
case you trade with a xed lot on a
master-account, everything becomes
much simpler. In this case, a lot
scaling coefcient is often used. I.e.,
a lot on a sub-account is calculated
by multiplying a master-account
lot size by a given coefcient. But
a strategy may have a complex
money management system. In this
case, use of the scaling coefcient
may lead to violation of the system
ideology. There are methods of
lot calculation on a sub-account
depending on master-account
balance, sub-account balance and
lot size on a master-account.
Master Lot Size * (Slave Balance /
Master Balance) * Ratio (risk)
THE KEY TO SUCCESS
Preparation to copying may seem
to be a very complex procedure,
but the stage of preparation and
preliminary analysis is the key to
success. Obvious as it may seem,
a feasible signal copier should
be able to copy from several
master accounts to multiple slave
accounts if the benets of trade
copying are to be fully realize. The
most viable trading robot system
must have proven trade-reversing
options, which the trader can easily
customize. Additionally, the best
automated systems should have a
convenient provision that enables
traders to amend prot and loss
stop levels as well as multiplier levels
when necessary.
An essential aspect of preparation
and preliminary analysis of trading
robots is the ability of the operator
to choose specic currency pairs. To
leverage the full advantages of the
system, the operator should also be
able to forego any currency pairs
that he is not willing to utilize. The
ability to copy signals to multiple
traders is of essence as is the
systems compatibility with all types
of brokers.
New models and methodologies
When creating your own
automated trading system, it is
recommendable to factor in the
issue of remote accessibility.
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Products described in article
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