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Strategies & styles

Algorithmic trading

By Jarosław Wasiński • Published: • Updated:
Using programmed rules to analyse or execute trades, with partial or full automation. Examples include Expert Advisors and API-based systems. Repeatability can reduce some impulsive decisions, but model errors, operational failures and supervision remain relevant. Automation does not create an edge by itself.
Example. An EA checks completed H1 candles and sends an order only after the signal and risk checks pass. After losing connectivity, it must reconcile account state before retrying: a missing response does not establish that an order failed to execute, and an unguarded retry can create a duplicate position.

Signals, execution and supervision

An algorithm can automate an entire system or just screening, sizing, order handling or exits. An operator still defines rules and permissible changes. Mechanical execution can reduce some impulsive decisions, but it removes neither design errors nor emotionally driven parameter changes, and supervision remains necessary.

From testing to operation

Historical testing should reproduce signal availability, Bid/Ask prices, costs, permitted volume and rejected orders. Forward testing then compares signal and execution logs. Identical code can behave differently after changes to the symbol, contract specification, timezone or platform version. A successful compilation is not a profitability test.

Exceptional states

Define responses to duplicates, missing data, disconnections, unknown server responses and position discrepancies. Reconciling account state matters as much as identifying an entry. Exposure limits and an independent stopping procedure can contain damage; closing a local application does not itself close positions held on a trading server.

FAQ

Does every algorithm open trades automatically?
No. It may only calculate signals or size, or execute orders approved by a person. Specify the automated scope.
Does automation remove the need for an edge?
No. It consistently executes rules that can produce either positive or negative net results.

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Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

  • Creator and editor-in-chief of MyBank.pl, providing reliable financial education since 2004.
  • Author of hundreds of in-depth market commentaries, structural analyses, and educational materials for traders and investors.
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All content is educational and informational only – it does not constitute investment advice or a recommendation. Remember: leveraged trading (Forex/CFD) carries a high risk of rapid capital loss.