How to Develop a Forex Trading Bot?

A forex trading bot is a computerized system that follows a specific set of trade signals and settings to analyze the market and determine the best prices for you to buy/sell the currency pair. They help eliminate the emotional and psychological biases while automating the forex trading experiences. Such platforms are developed using the MetaTrader4 platform that employs complex mathematical programs to monitor the market, identify the updates and take the buy/sell decisions on your behalf.

Thanks to the boost in forex trading, forex trading bots have gained tremendous popularity recently. No wonder, with rising users, investors are also taking an interest in developing forex trading bots. But, how exactly can you build a forex trading bot that delivers expected revenue?

Let’s explore here.

How to Develop a Forex Trading Bot?

Step 1: Discovery Phase to Create a Trading Plan

To get the most out of your investment in trading bot development, create a detailed trading plan. In other words, it is a blueprint for your trading bot application that determines your aims and how will automated trading platform streamline them. Answer the following questions:

  • How your target market will interact with your application?
  • What is the risk-reward ratio you want to implement?
  • What strategy will the automated bot use?

This is the initial research stage where you associate with expert business consultants to identify the project specifics. This stage combines multiple sub-steps, including analyzing the idea, market research, and outlining the expected product specifications.

Once these aspects are handled, business consultants from a trading bot development company like Matellio can help you work around the technical aspects discussed here.

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a. Platform for User-Facing Application Development

A user-facing application will be the interface to interact with your customers or the traders. It should be able to hide the underlying complexity to give the user the best experience. You mainly have two options to choose from:

  • Native application development: Native applications include Android and iOS apps that only work on one specific device. If you target a market that majorly favors one of the two devices, you can opt for native app development. Such apps offer benefits in terms of:
  • Better efficiency and performance
  • Robust security
  • Highly interactive and intuitive
  • Can access all the device features
  • Bug-free operation
  • Cross-platform application development: Cross-platform mobile apps deliver seamless performance across multiple devices. These apps provide benefits like:
  • Broader reach with higher exposure
  • Native-like experience
  • Reusable codes that boost cost-effectivity
  • Quick deployment and maintenance
  • Cloud integration options
  • Quick turnaround and faster customization
  • Uniform designs
  • Direct access to plugin

b. Strategy to Implement for Forex Trading Bot Development

Forex trading bots are automated and help with seamless trading. Here are the strategies that you can implement for your forex trading bot:

  • Trend Following: This bot responds to the direct market changes and doesn’t require complex algorithms to yield the results.
  • Arbitrage: Such bots exploit the difference in prices between forex commodities across the globe. Since there is no centralized exchange to determine the price, prices vary from exchange to exchange.
  • Market Making: This strategy allows forex traders to buy and sell high volumes of currency and profit from the spread.

c. Choosing Team for Forex Bot Development

Once you have created the strategy and decided on the platform for your forex bot, the next step is to choose a skilled human resource who would help you build the platform. Your team must include the following professionals:

  • A project manager who will be your point of contact with the forex bot development company
  • Mobile/ Web app developers
  • AI/ML developers
  • UI/UX engineers
  • QA and Testing experts

At Matellio, we are committed to serving our customers with quality products with a quick turnaround time. Our teams are well-versed in advanced technologies and hold extensive experience of two decades. Our clearly defined client-centric agile methodology and communication models allow a seamless development cycle.

d. Finalize the Technology Stack

The technology stack is the building block of your application and is fundamental to its success. Choosing the wrong technology stack can impact your application experience adversely and cause your users to question its reliability. Make sure you choose the latest technology frameworks and APIs. Here we have listed some of the well-known frameworks for you.

App Development:

  • Swift (for iOS development)
  • Android Studio (for Android development)
  • React Native (Cross-platform development)
  • Ionic (Cross-platform development)
  • Xamarin (Cross-platform development)

AI and Analytics Tools:

  • Python
  • Java
  • Amazon EC2
  • Amazon S3
  • Kafka
  • Scala
  • Amazon VPC
  • Amazon EMR
  • Apache Impala

Utilities

  • Elastic Search
  • DevOps tools
  • Chef
  • AWS CloudFormation

Database

  • Aerospike
  • MongoDB
  • Cassandra
  • HBase
  • MySQL
  • Postgres

Step 2: The App Architecture Based on How Forex Trading Bots Work

There are three levels to mobile architecture:

  • Presentation Layer
  • Business Layer
  • Data Access Layer

Generally, the forex trading bot’s working would be similar to the one shown in the following image.

The app architecture specifies a set of techniques and patterns according to which the solution is structured. It is designed as per the app owner’s requirements and industry standards in mind.

To create an app architecture that satisfies all the features and functionalities work in seamless collaboration. This gives development teams a clear idea of the process to ensure quicker turnaround and easier maintenance. An efficient app architecture with the right technology helps to solve complex business challenges.

Step 3: Identify and Implement the Risk Management Strategies

When you want to design a robust trading bot, it is essential to implement risk management tools in the system’s background. Forex risk management comprises strategies to protect traders against the downside of a trade. Higher risk implies sizeable returns. However, it also significantly increases the chances of loss. Therefore, a forex trading bot should be able to help users minimize losses and maximize gains.

This implies that your system should be capable of:

  • Implementing basic stop close to a price closest to the value that you specify.
  • Guaranteed stop close that closes your position at the exact value you specify.
  • Trailing stop follows positive price movements to lock the profits.
  • The system can also implement automated close if the trade move towards a positive level.

Step 4: Forex Bot Development

Now that you have a clear idea of what you need, the next step is to put the development process into action. Consider how the system will identify trading opportunities and how it will proceed with the same. Ensure you inform the users in advance if they want the system to place trades or notify them.

Forex bots rely on technical analysis instead of fundamental analysis, making knowledge of the industry a vital element. Become the end-user for some time and think about the tools and indicators that help you identify the trends and decide when to place the trends.

Once the system is designed on paper, the next step is to hire a forex bot development company.

Step 5: QA and Testing

Before deployment, the final step is QA and testing using historical data and refining it to achieve the desired results. Ensure each of the application features is well-tested to deliver the AI bot system that boosts user engagement.

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Get Started with Forex Bot Development

Now that you have a clear understanding of forex bots and how to develop them, it’s time to put forth your option among the target users. Make sure you choose the best forex bot development company on the market that offers you with:

  • Quick turnaround without affecting the quality of product
  • Seamless product development lifecycle
  • Experienced developers and project managers who understand the market
  • Have a rich portfolio that talks about the quality of services
  • Delighted customers that reflect through their testimonials

A company with these attributes will help you set the best foot forward and deliver results.

At Matellio, besides a plethora of such benefits, we also offer our customers cost-effective services while keeping their satisfaction at focus. Our expert business analysts help you ensure that you set the right goals after understanding your challenges and business goals to deliver the expected results in the future. Begin with a FREE 30-minute consultation right away!

Originally published at https://www.matellio.com/ on June 26, 2021

Founder & Board Member at Matellio — Technology enthusiast with enterprise solution design & development expertise