Automated trading opens up possibilities that simply wouldn’t be possible for the human trader operating alone. By leveraging the latest algorithms to generate signals, traders can find more opportunities and at a much faster rate.
Using a trading signals app is like having a virtual assistant to put in the leg work – crunching huge amounts of market data in the blink of an eye to identify potential trends and find the optimum point to open or close trading positions. In the following guide, we’ll take a closer look at the advantages offered by trading algorithms.
The key to successful trading is all about knowing when to enter and exit the markets – going long on an asset before its price increases, or going short before it goes down and getting out before things turn around. There are numerous ways in which traders try to identify opportunities, usually based on analysis of previous data.
Trading signals are alerts or suggestions that are sent to traders. Sometimes these come from professional human analysts, but in recent years signals generated by mathematical algorithms have become more popular.
When you sign up to a trading signals app, you’ll usually be offered several options. For example, AtoZ Markets offers its members one free signal a day, with the option to pay a subscription to increase that number. Traders can then act on the signals themselves or use the autotrader to do it on their behalf.
If you’re looking to take advantage of the latest algorithms, then the first thing you need to do is find a trading signals app and set up an account. Once you’ve chosen your provider, then there are several ways you can use trading signals.
A trading signal is like a recommendation that suggests an asset to trade, whether to go long or short, when to enter the market and how long to hold the position. An experienced trader might combine such signals with their own analysis and decide whether to act on the signal or not. Novice traders, however, are usually better off trading with signals.
Depending on the trading signals app you are using you can usually set your bot to copy the signals trade automatically, which effectively means the bot is trading on your behalf. Alternatively, you can manually enter the details of the signal and retain control over the transaction for yourself.
Novice traders are often confused between trading signals, trading algorithms, and trading bots. Effectively, they are all part of the same set of trading tools. Different bots will have different capabilities, but most will have the same basic capabilities:
Algorithm-based trading is derived from the analysis of previous price data. Whereas it takes human traders time and effort to scan the charts and identify patterns, a bot can collect, analyse and interpret data at the touch of a button.
In addition to identifying potential trends and patterns in price movement, most trading bots will also assess risk and this will be included in the trading signal.
A signal trading app can be used to simply generate recommendations which a human trader decides whether to act on or not. However, platforms like AtoZ Markets also offer an autotrade function, wherein the trading bot can actually execute trades based on the information in the trading signals.
There are numerous options when it comes to choosing a trading signal app and which one you choose will largely depend on what markets you are looking to trade-in and your level of experience. However, as a starting point, we think the following factors are important considerations:
You will usually have to pay a fee to use a signal trading app. Sometimes this is a one of payment, other times it will come in the form of an ongoing subscription. However, some platforms, such as AtoZ Markets, actually provide traders with one free signal per day – which is a great opportunity to find out what signal trading is all about before committing to the premium service.
It’s worth having a think about your technical know-how before choosing a signals trading app. Whilst many interfaces will be user friendly and require little to no understanding of programming, others may be highly customisable for those who understand how to write code. The signal trading app you choose should be one you are comfortable using.
An often overlooked aspect of choosing a signal trading app is community. An existing user base not only allows you to find out how effective a platform can be but being able to communicate with other traders and access market news and information can be a game-changer – especially for the less experienced trader.
Finally, you should also be aware that some trading bots are optimised for a particular market. Some trading platforms will actually offer multiple algorithms to allow you to dip in and out of different markets, whilst others may be focused on a particular asset, such as forex or cryptocurrency. Make sure you choose a signal trading app that can meet your requirements.
Once you think you have found the best signal trading app, then the first thing you’ll need to do is open an account – where relevant – and make sure you have access to the software. More often than not it will work alongside a proprietary trading platform or come in the form of a plugin for existing platforms, such as the popular Meta Trader series.
You have a few options when it comes to actually putting a bot to work. You can use professionally written algorithms to identify potential opportunities in the market, which you then receive as trading signals that you can choose whether to act upon or not. This is often similar to trend trading, wherein the bot will crunch reams of market data to try and identify when an asset is going to increase or decrease in value.
In addition to generating trading signals, bots can also execute trades automatically. Effectively, this involves an algorithm opening and closing a position on your behalf, in accordance with the signal that is generated. Whilst this is a multi-stage process, the bot can handle everything in the blink of an eye.
Algorithm-based Signal trading apps are hugely popular now and are only becoming more sophisticated as time goes on. The advantages of having a bot scan the markets on your behalf might well be obvious, but we’ve come up with the following list of what we think the top-selling points:
A trading signals app effectively offers you expert guidance on which trades to make. To actually employ a professional human analyst to conduct this research on your behalf would be a very costly affair, but trading bots can offer high-level insights at a very reasonable cost.
Trading bots can churn out signals at a much faster rate than a human analyst could manage, which means you have the opportunity to open and close more positions and gain wider market exposure than you would if you were operating with manual tools alone.
The smaller the returns on a position, the more volume is needed to make it cost-effective. This can be problematic for a human trader, but not for a trading bot. In addition, trading in this way can serve to diversify risk – which should always be of paramount concern.
A major advantage of algorithm-generated trading signals is that they can be processed 24/7 – which is especially useful for those looking to trade cryptocurrency or forex, as they are both markets that run around the clock.
Another major advantage of using a signal trading app is that bots remain completely emotionless and can stick to a longer-term game plan. An algorithm isn’t swayed by bias in the same way a human trader might be and can run purely by the numbers.
However, just whilst there are many advantages in using a signal trading app, there are one or two downsides:
A popular misconception is that algorithm-generated signals are somehow infallible. This simply isn’t the case. Whilst they are based on solid fundamentals and market analysis, they are always speculative and can never be relied upon 100%.
Trading signal apps are commonly available and many top trading platforms include them as standard. The good news is that anyone can use a trading signal app. Whilst they do vary in complexity, there are plenty of options that are aimed at traders with little technical know-how when it comes to using automation software.
Choosing the best trading signal app will largely come down to personal choice. However, if you’re struggling to find one, we’d recommend checking out AtoZ Markets, as the platform offers a free trial to new members so you can see what you think of its software before you commit.
Most countries that allow retail trading will allow trading signals apps to be used. However, it’s always better safe than sorry and we’d recommend you check the rules on trading bots and signal apps in your jurisdiction.
Trading bots are powerful tools that offer differing levels of automation. You might decide that you simply wanted to receive algorithm-generated trading signals from time to time. On the other hand, you might decide you’re happy for a bot to take the reins and open and close trades on your behalf.
If you want to start using trading signals then the best thing to do is find a reputable trading signal app. Once you’re signed up, you can then receive signals at whatever frequencies are offered by your provider.
It might seem like traders have to make a binary decision between automated trading and manual trading, but this simply isn’t the case. As we have seen, there are different levels of automation available.
Some traders might simply use algorithms to generate signals. They can then cast their eye over the bot recommendations and decide whether they want to act on them. This is an example of when trading can be a team effort between a trading bot and a human trader.
Alternatively, it is possible to automate the entire process. In theory, this is much more time-efficient and allows you to enter into more trades than you would do manually. Most traders will find they learn early on if they prefer full automation or to keep their hands on the wheel.
A good trading signals app can provide a major boost to any trader. Whilst bots cannot offer guaranteed results, they are capable of highly accurate technical analysis and the signals they provide save traders hours of scanning the charts to identify trends. If you’re in the market for a signals trading app, then the best thing to do is get yourself set up with a demo account to start finding out how they can slot into your current trading strategy.
Numerous trading platforms offer algorithm-generated signals. However, before you start looking for a provider, it’s worth spending a little time considering what you are looking for and what you expect from a signals trading app.
Signal trading apps can offer different functions, depending on the software in question. Effectively, traders can choose how much automation they require and a signals app usually fits into the process somewhere along the line. You can find out more in our guide to the best signals trading apps.
When it comes to trading, nothing is guaranteed. A signals trading app should be seen as just another tool to make a trader’s life easier, rather than a shortcut to success. Making money by trading on the financial markets requires time, research and perseverance – a trading app does not replace these qualities.
The latest trading bots can perform a variety of tasks aimed at making things easier for the human trader. Exactly what they are capable of will depend on which bot you use. However, before you get started with trading algorithms, it’s worth taking the time to find out exactly what their capabilities and limitations are.
Many traders wonder exactly what they can expect from signals trading apps. It’s difficult to find conclusive data on this as, just like any tool, apps and bots need to be used responsibly for them to provide maximum efficiency.
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