What Are Automated Trading Systems?
Automatic trading systems, sometimes called mechanical trading, algorithmic trading, or system trading, can be programmed to automatically execute trades on a computer without a person being present. Traders can set up specific rules for entries and exits based on their trading plan and objectives. Automated trading has become a very popular method of trading.
It was recently reported that automated trading accounts for 70% to 80% or more of the shares traded on the U.S. stock exchanges.
An automatic trading system is a set of rules that define the exact entry, exit, and money management criteria that allows a computer to execute and monitor the trades. Traders and investors like this strategy because it takes some of the emotion out of trading.
Basic conditions like moving average crossovers can be used as triggers for entry and exits on trades. More experienced traders can develop more sophisticated strategies requiring more in-depth knowledge of programming language on a specific trading platform.
Automated Trading on The NinjaTrader Platform
Traders and investors find the automated trading feature on the NinjaTrader platform to be very important and valuable. Orders are executed based on specific market conditions predefined by the individual trader by using the platform’s NinjaScript programming language.
Once traders log into their accounts, they will have full access to the automated trading strategy. The My Systems interface allows you to customize your trading system by adding different strategies, indicators, or drawing tools.
How to Setup NinjaTrader for Automated Trading
The best way to set up NinjaTrader for automated trading is to use compatible software from a 3rd party source.
They can provide tools that allow traders to set up fully-automated systems that will meet their specific needs.
NinjaTrader’s Automated Trading Interface (ATI)
For NinjaTrader to perform automated order execution from an external source, it receives trading signals from NinjaTrader’s ATI.
What Can NinjaTrader’s ATI Do?
- Place orders
- Initiate a NinjaTrader ATM Strategy
- Change orders
- Cancel orders
- Close ATM Strategies and positions
- Flatten accounts
- Cancel all orders
- Retrieve information on positions and orders
There are three options to send external communication to NinjaTrader’s ATI for trade automation.
- TradeStation Email Interface: The easiest option is the Email Interface, which requires no programming experience. The TradeStation Email Interface allows traders to run their strategies in real time. Orders are processed from NinjaTrader through your broker after NinjaTrader receives a trade signal from your PC’s TradeStation email account.
- File Interface: Order instruction files (OIF) are standard text files used by the file interface. The instant the OIF file is written, NinjaTrader processes it to the hard drive. Once the processing operation is complete, NinjaTrader immediately deletes it from the hard drive.
- DLL Interface: To support different functions necessary for automated trading, NinjaTrader provides a DLL called NtDirect.dll.
The word “automation” may seem like it makes the task more straightforward, but there are a few things you will need to keep in mind before you start using these systems. Know what you’re getting into, and make sure you understand the ins and outs of the system. That means keeping your goals and strategies simple before turning to more complicated trading strategies.