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MAM / MAT trading robots in the stock market - what they are and how to use them

MAM / MAT trading robots in the stock market - what they are and how to use them
A MAM / MAT trading robot or a bot is not a technical device, but a special algorithm that can become a real terminator in the exchange market, protecting its master from considerable financial losses, coming to his aid in making difficult decisions and even independently acting as a seller or a buyer on the securities market. However, it is not a reliable mechanism without the right to make a mistake. Like any program, it has its strengths and weaknesses.

What is a trading robot?

It is an automatic trader, a computer program that can fully or partially replace a broker in exchange trading. It sets an algorithm repeating the trader's actions and is capable of independently monitoring the necessary indicators and making decisions about the trade on the basis of one or more conditions.

In a broader sense a trading bot is a triune system combining program code, computer and trading terminal.

Important. Trading robots can differ in the following parameters:

- restrictions on the deposit and trading platforms;
- behavioral strategy;
- the sequence of changes in the settings;
- mechanisms of shorts, stop-losses, take-profits.
MAM / MAT trading robots in the stock market - what they are and how to use them

MAM / MAT trading robots in the stock market - what they are and how to use them

Principle of trading robot at the exchange

Algorithmic trading became common not only for professional players of the stock market, but also for private brokers. Everyone "trains" the robot of its strategy by setting certain parameters - the time of opening a position, fixing profits, setting stop-losses. Those parameters are prescribed that are taken into account by the trader in trading, and then the system with individual settings is connected to the trading floor. Thus, robots are able to make their own buy and sell decisions, taking into account the charts of asset price movements, financial performance of companies and even political events - everything that is embedded in their algorithm. They accumulate information and calculate the yield.

Types of trading robots

The range of actions of the bot at the exchange is determined by the degree of its automation.

Semi-automatic robots, also known as Expert Advisors. They analyze the market, calculate various options of asset price movement and give a signal to buy or sell.

The automated robot is completely independent. It is connected to your trading account and makes transactions by itself. In addition to the analysis it calculates the level of risk and to a certain extent takes into account force majeure situations.

The strategy of bots is set by certain parameters - opening and closing positions, fixing profits and others, and their volume can vary. A simple robot can buy on fall and sell on rise, more sophisticated programs take into account additional parameters when placing orders. For example, they will start to buy assets when the fall of an asset is under 10% but stop when it exceeds 25% in order not to fall into a downtrend.

Pros and cons of trading bots

All trading robots have one undeniable advantage: they are unemotional. On the stock market, this quality is especially valuable. In addition, they are not subject to such human weaknesses as greediness and indecision, they act according to a pre-set program, and are not tempted to buy on the maximum, and sell on the minimum, while risking all profits.

Bots are able to process such volumes of information at a speed at which even the human genius brain can't do it, the technical analysis they have mastered "perfectly". They do not get tired and will always be accurate in placing orders within a given program. Automation saves a lot of time for the trader and allows trading on several platforms at the same time.

However, no one is without disadvantages.

Virtual traders are not strong in fundamental analysis. They lack intelligence. It is better to take into consideration the influence of such a factor as a vaccine development or a program statement of heads of states.

Any deviation of the situation from the set standard can throw the algorithm into a stupor. More precisely, it will continue to act, but according to the scheme, regardless of the changed circumstances.

And finally, it is not easy to buy a perfectly written computer code.

What strategies are used by MAM / MAT trading robots?

Trending. The task of the bot is to determine the moment to open a position based on the downtrend or uptrend over long stretches of time, and at the forthcoming reversal to fix the profit. The opposite is a counter-trend strategy, when the bot buys and sells on corrections and pullbacks.

Scalping - "fast but often". Short trading session with an emphasis on the maximum price levels, using which the algorithm creates an order with a take profit and stop loss. The duration - up to half an hour, the profit from one transaction is small, but it is multiplied by the significant number of sessions, which may reach several hundred in a day, which is beyond human control. This explains the high popularity of this very risky strategy. A robot scalper can "borrow" and earn up to 1,000% in a year. But higher profitability means higher risks.
The channel strategy is considered to be universal. Trading is done within the price corridor, on the lower border of which the bot buys assets, and on the upper - sells. The undoubted advantage is the low risks, in addition, the stop-loss serves as insurance in case of penetration of the minimum level. This strategy cannot be fully automated, as the boundaries of the corridor are set by the trader.
Grid. It is based on trading with pending limit orders. The zero mark is the current market price from which the orders are set at an equal distance, but in opposite directions. In this case, the bot is very effective because it takes a lot of time to create a grid manually.
Indicator-based, when a fundamental analysis is applied, but here, a human can give the bot a head start. The bots are not so strong in this case. They lack intelligence.

Each of these strategies as well as dozens of others have modifications and a trading robot can combine several of them.

When is it worth using a trading robot?

Algorithmic trading can be both a support and a trap for the beginner of the stock market, because it is not easy to take into account all the detailed settings without experience. An experienced broker will be spared a lot of routine operations with a robot.

The necessity of using a bot does not depend on the qualifications of the trader, but rather on the amounts that he operates. A virtual assistant should have sufficient financial room for maneuvering. Many trading robots require a range of transactions starting from at least half a million rubles to work properly.

Can I use a multi-account trading robot?

Using MAM / MAT trading multi-account robots is no different than trading on a single terminal. You use your terminal as a master in which all the orders are executed, and the connected terminals as the replicated ones, so you can increase your income many times with a smart strategy. You can even use connectable accounts of different brokers, trading simultaneously on different platforms.

It is too early to put a point in the argument whether a robot or a human is more functional and efficient on a trading floor. You should certainly not put the responsibility entirely on the bot. But it can become an excellent assistant under careful guidance.

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