Forex glossary
Algorithmic trading
Algorithmic trading uses software to determine order parameters or execute orders according to programmed rules. It can automate an entire strategy or only split and execute an order. Automation does not remove coding errors, trading costs or human choices embedded in the rules.
Illustrative example
How does it work in practice?
In a hypothetical strategy, software buys 100 units after a moving-average crossover at the candle close. A one-position limit prevents repeated entries on every tick while the existing position remains open.
A case to work through
One signal, many ticks
Hypothetically, a buy condition remains true for 40 ticks; the plan allows one position.
- Without checking existing positions, the code may submit repeated orders.
- Require no existing position and identify signals already processed.
What follows? Test order counts and rejections as well as signal detection.
Example boundary: Behavior depends on code, permissions and broker responses.
From signal to order
Text description of the diagram
- Price condition: Did the signal use the correct available inputs?
- Strategy state: Is there no position and has this signal not been processed?
- Order submission: Check the response and execution result.
A useful distinction
Algorithmic trading / Expert Advisor (EA)
Algorithmic trading is an automation method; an Expert Advisor is a specific MetaTrader program format.
Check your understanding
Identify missing state checks in an automated rule.
Show the answer and explanation
Checking positions and processed signals
The rule must account for state as well as price conditions.
From a plan to automation tests
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Related terms
Sources and documentation
- MetaTrader 5 – algorithmic trading
Expert Advisor operation and trading permissions in the terminal.
Document read: - cTrader – automation
cBot development and the platform's automation environment.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.