Trade around the clock and never miss an opportunity with algorithmic trading, now available on a range of platforms when you choose South Africa’s leading CFD provider. Create and refine your own trading algorithms, or use off-the-shelf solutions, to speculate on our offering of over 16,000 markets.
What is algorithmic trading?
Algorithmic trading uses computer codes and chart analysis to enter and exit trades according to set parameters such as price movements or volatility levels. Once the current market conditions match any predetermined criteria, trading algorithms can execute a buy or sell order on your behalf. This can save you time scanning the markets, and it means that your trades are executed almost instantly.
With IG, algorithmic trading is made possible through partnerships with cutting-edge platforms such as ProRealTime and MetaTrader 4 (MT4), as well as with our native APIs. We also offer advanced technical analysis and charting tools to make algorithmic trading easy for you, whether you want to build and fully customise your own algorithms or use off-the-shelf solutions.
Why use algorithmic trading?
Remove human error
Trade without letting emotions get in the way of realising profits or cutting losses
Capitalise on rare or special events
Create algorithms to act on infrequent events such as the Dow closing 500 below its 20-day moving average
Supplement your existing strategy
Use algorithms to finely tune risk management in your trading strategy, implementing stops and limits on your behalf
Set your algorithms up and let them trade around your schedule, 24 hours, day or night
Backtest and refine your algorithms against historical data, to establish the best combination of parameters to buy or sell
Choose or create an algorithm according to your strategy, and maximise your exposure to opportunities in the underlying market
Algorithmic trading with IG
Build your own algorithms, or use off-the-shelf solutions, to trade CFDs
Use cutting-edge trading strategies to monitor the order book and manage your execution
Add advanced algorithmic strategies to your trading at no extra cost
Get expert support 24 hours a day, from 8am Saturday to 10pm Friday
Choose different platforms depending on your algorithmic trading preferences
What’s the best algorithmic trading platform for me?
- MetaTrader 4
- Native APIs
For easy algorithm building
ProRealTime is the leading web-based charting package, which you can use to create your own trading algorithms. ProRealTime is designed to make building algorithms easy, and it is recommended if you want to create, test and refine your own algorithms.
Tools within the platform, such as the ProRealTime optimisation suite and the platform’s own coding language – ProBuilder, make it easy to create, backtest and refine your own algorithms from scratch. This means your algorithms will operate according to your exact specifications while running on the ProRealTime platform.
For pre-made algorithms
MT4 is a tried-and-tested trading platform, with a large community of users who are actively creating and refining trading algorithms. These are easily available to you on the MT4 marketplace, from which you can download pre-made algorithms. Because of this, MT4 is usually preferable if you are looking for off-the-shelf solutions.
MT4 is known for its indicators and add-ons, 18 of which you get for free when you download MT4 from IG. These can help you with chart analysis, as well as enabling you to fully customise the MT4 platform to your own needs.
For building from scratch
An application programming interface (API) enables you to automate trades, build integrations and create trading algorithms and apps using our market-leading CFD technology. Our web API offers you an easy way to get market data and historical prices, plus execute trades on any of your IG trading accounts.
Creating APIs is only recommended for those with a background in programming and coding, because it is the most complex of the options available here. However, APIs do offer the greatest amount of customisation, since you build them yourself from the ground up using coding language such as Java, Excel (VBA), .NET, or any other programming language that supports HTTP.
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Or practise on a risk-free demo if you’d prefer.
What are the main algorithmic trading strategies?
There are three main types of algo trading strategy available to you. These are strategies that you can use when building and refining your algorithms, or they can be strategies that you want your off-the-shelf algorithms to be able to implement.
- Price action strategy
- Technical analysis strategy
- Combination strategy
A price action algorithmic trading strategy will look at previous open and close or high and low points on a candlestick chart, and the algorithm would trigger a buy or sell order if similar levels were achieved in the future. You could, for example, create an algorithm to enter buy or sell orders if the price moves above point X, or if the price falls below point Y. This is a popular algorithm with scalpers who want to make a series of quick but small profits throughout the day on highly volatile markets – a process known as high-frequency trading (HFT).
To create a price action trading algorithm, you’ll need to assess whether and when you want to go long or short. You’ll also need to consider measures to help you manage your risk, such as stops – including trailing and guaranteed stops – and limits.
You can configure a price action trading algorithm according to the market, the time frame, the size of the trade and what time of day the algorithm should operate.
A technical analysis algo trading strategy is concerned with technical indicators such as Bollinger bands, stochastic oscillators, MACD, the relative strength index and many more. With this strategy, you’d create an algorithm to act on the parameters of these indicators, such as closing a position when volatility levels spike. Aside from the ones mentioned here, you can also build indicators yourself on platforms such as ProRealTime.
To create a technical analysis strategy, you’ll need to research and be comfortable using different technical indicators. For example, you can create algorithms based on Bollinger bands to open or close trades during highly volatile times. Whether you open or close depends on your attitude to risk, and whether you have a long or short position in a rising or falling market.
With a technical analysis strategy, you’re less focused on price and more interested in using indicators or a combination of indicators to trigger your buy and sell orders.
A combination algorithmic trading strategy uses both price action, and technical analysis, to confirm suspicions about price action by analysing charts with indicators. Algorithms can then enter buy or sell orders based on this information.
To create a combination trading strategy, you’ll need to carry out analysis of price action on an underlying market. This means having an understanding of different technical indicators and what they tell you about an asset’s previous price movements.
In a combination strategy, you’ll need to establish whether you want to go long or short, and at what time you want the algorithm to trade. You can configure a combination strategy according to the market, the time frame, the size of the trade and the different indicators that the algorithm is designed to use.
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1 Based on revenue excluding FX (published half-yearly financial statements, June 2019); for forex based on number of primary relationships with FX traders (Investment Trends UK Leveraged Trading Report released July 2019).