In 1949, Richard Donchian developed automated trading – the buying and selling of funds based on a set of predetermined rules. Also called algorithmic trading, though some might say a subset of, the auto trading program automatically sends orders to an exchange. Auto trading really began to take off in the 80s when famous traders like John Henry began to use rule-based strategies. By 2014, auto trading had exploded, with over 70% of trades being conducted by computer programs.
With auto trading a trading bot helps you set and execute your trades. To build such a bot, you need to understand how trading works and be able to develop a trading strategy. Next you would set up the parameters for your bot which your bot would then automatically execute the trading tasks.
However, not everyone has the coding skills required to create an automated strategy. This is where DBot, developed by Deriv, steps in to fill the void. DBot eases the process of automated trading for traders of all levels of skill and experience.
How Does DBot Work?
DBot interacts with the online platform or exchange (Deriv.com) through an application program interface (API). With auto trading, an application programming interface is the messenger, tasked with taking your requests. It conveys to the trading bot what you want done and delivers the response to you.
After the trading bot has been enabled, trades can be automatically entered into, monitored and exited. All these actions are based on the rules defined by you when customising the bot for your trading style. Customising is an easy click-and-select scenario that means you need no knowledge of how to write a computer program. All you need to know, is what you want it to do. We’ll show you how further into this article but first, let's look at why you would use DBot.
The Benefits of Using DBot
Some of the key advantages DBot offers traders are:
Not every trader has the time to continuously monitor the markets to capitalise on every trading opportunity. Also, every financial market has specific time of the day when it sees maximum trading volumes and price moves. Sometimes, the moves are so quick that the time taken manually analysing and then entering a trade could lead to missing out on the opportunity.
With DBot, all you need to do is choose the asset you wish to trade, enter the parameters for entry and exit and set the position size. The bot will track the market and as soon as all the conditions set by you are met, it will automatically open a position for you. When the price of the asset moves to the stop loss or take profit level, the bot will automatically close the position.
This way, you continue to make the most of trading opportunities without needing to stay in front of your trade terminal all day.
Trading Without Emotion
Trading involves money, and with that comes emotions. In fact, fear and greed are two emotions that tend to influence trading decisions for many. The fear of loss can lead traders to hesitate before take trading positions. This could lead to lost opportunities. On the other hand, greed for greater profits could make a trader hold on to a position for too long. This again can lead to losses.
With DBot, emotions can be eliminated from trading. The bot follows only the conditions pre-set by you for trading. It uses the technical analysis tools and other algorithms to determine when to buy or sell.
DBot doesn’t sleep. With our trading bot, you can truly trade at any time and from anywhere. Since it does not require constant monitoring, you can even capture market movements while you’re sleeping, literally. Just set your specifications and let DBot do the hard work.
Helps Develop Trading Discipline
What separates great traders from good ones is that they are extremely disciplined and patient. They continue to analyse their moves to refine their strategies and decision making.
With DBot, you too can analyse your strategy, review completed trades, and apply what you’ve learned to future trades. It also offers a practice environment, where you can learn the ropes and develop a robust trading strategy. The more you practice, the more you develop discipline with your trading.
How to Use DBot?
DBot has an extremely easy to use layout. There are 4 blocks through which you can define the specifications to start trading. These are:
This is the first of the mandatory blocks. It is added by default when you start building your strategy. More than one copy of this block cannot be added to the canvas. Under this section, you will need to select:
The type of asset you wish to trade and the desired market type. You can choose from synthetic indices, forex, stock indices and commodities. Once you have chosen the market type, other details need to be filled in. For example, on selecting stock indices, you will be offered a choice of regions, such as the Americas, Europe, and Asia/Oceania. After that you can select the index.
You can also choose the desired trade type, such as Up/Down, Touch/No Touch, and In/Out. You can then set subsequent requirements for the selected trade type.
Next, you will need to choose the contract type. For instance, with the In/Out trade type, you can select from Ends Between, Ends Outside, or Both. Your selection will determine the options available in the Purchase block.
Other parameters you need to define are:
- The chart’s timeframe – the most commonly used timeframe by intraday traders is 1 hour.
- Choose if you want restart buy/sell on error.
- Choose if you want restart last trade on error.
You can also define the trade options, such as stake, desired duration, prediction, and/or barrier(s) for the contract.
Once you have defined the trade parameters and conditions, you can set the purchase conditions. Here, you will need to instruct the bot about when to purchase contracts. For this, you can use conditional blocks and indicator blocks to help the bot make decisions.
You can use multiple purchase blocks, along with a conditional block, to define your purchase conditions. The purchase block can only be used under the purchase conditions block.
With this, you can set conditions for selling the contract before it expires. You can also use it to sell at market price.
Restart Trading Conditions
In this block, you can decide if your bot should continue trading. The block is used for adjusting the parameters for your next trade. Plus, you can use it to implement stop loss/take profit logic.
Apart from these, traders can access a wide range of analytic tools from the dashboard. DBot offers indicators and tick and candle analysis. Contract details and run time statistics are also available. On the right side, you get a journal of your trades, as well as a summary and report of all the transactions.
One of the key benefits of DBot is that you can also import readymade strategies, apart from saving and sharing your own strategies with other traders. With this, all your trading parameters, purchase conditions, sell conditions and restart trading conditions are instantly loaded. This can help you save significant time and effort, while benefiting from the experience and skill of other traders. Strategies can be loaded by clicking on the “Import” icon on the dashboard. After this, you can load the strategy from your device as well as from Google Drive.
DBot has specifically been designed to ease trading, without you needing to be a master coder or even have knowledge of programming. It is a highly versatile and efficient platform.
What do you think of automated trading bots? Tweet us at @Derivdotcom and share your experiences.