Algorithmic trading (algo trading for short) uses computer programs to execute trades automatically based on predetermined criteria. These programs enter and exit positions on traders' behalf when market conditions meet given parameters. Algo trading empowers traders to seize market opportunities faster and more efficiently.
With so many brokers to choose from, it can be time-consuming to find the right algo-focused broker.
This article introduces you to the top algorithmic trading platforms to help you choose a broker and software that fits your specific needs.
Quick Look: Best Algo Trading Forex Brokers
- Best Overall: FOREX.com
- Best for Dedicated Algo Traders: Nurp
- Best for Multiple Trading Platforms: FxPro
- Best for Beginners: AvaTrade
- Best for Advanced Traders: Interactive Brokers
- Best for MT4/MT5 users: Eightcap
Best Forex Brokers for Algorithmic Trading
Here is Benzinga’s list of the best forex brokers for algorithmic trading.
1. Best Overall Broker: FOREX.com
- Best For:Earning Cashback on FX TradesVIEW PROS & CONS:securely through Forex.com's website
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% to 77.7% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account
FOREX.com is a popular forex broker for algorithmic traders, offering advanced platforms with MT4/MT5 integration, which makes it ideal for automating trades. Traders can leverage a variety of custom indicators and expert advisors (EAs) to create and backtest their trading algorithm strategies. The broker's education resources are comprehensive, and customer support is available 24/7.
Pros
- Advanced trading platform with full support for trade automation
- Comprehensive educational and research resources
- 24/7 customer support
- Access to a wide selection of currency pairs
- Highly regulated
Cons
- High non-trading fees
2. Best for Dedicated Algo Traders: Nurp
- Best For:Speed and Precision Through Trading AlgorithmsVIEW PROS & CONS:securely through Nurp's website
Nurp is an algorithmic trading firm that provides investors with a range of educational tools and advanced metrics to assist with trading. The Algorithmic Trading Accelerator helps traders ensure that they can invest with wisdom, helping them move with the market.
You will see real-time data that’s tied to your assets, or you can use the resources on the site to teach yourself how to invest.
Pros
- Even a novice can use this site to learn, begin trading and build a portfolio
- Quality support for investors who have questions or concerns about their algorithms
- Real-time data helps you pivot with the market
- Readily accessible and state-of-the-art forex algorithmic trading solution for seamless algo-trading execution
- Multiple sophisticated trading algorithms operating across multiple financial markets
Cons
- If you have several algorithms live at the same time, your license fee could grow quickly
- Monthly licensing fee per algorithm that is active
3. Best for Forex Traders Who Want Choices in Trading Markets: FxPro
- Best For:Excellent Trading ConditionsVIEW PROS & CONS:securely through FxPro International's website
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
FxPro offers traders access to the forex and contracts for difference (CFD) market where they can access hundreds of assets, including forex, metals, indices, shares and cryptocurrencies. You can use 1 of the 8 base currencies. There are no extra fees, and there’s only an inactivity fee if your account is idle for 6 months. Multilingual support is offered to you 24/5, and you can use many different platforms, including MT4 and MT5.
Pros
- Hundreds of trading instruments
- Leverage up to 500:1
- Fast execution
- Multiple markets available to traders
Cons
- You may prefer to trade in a wider range of assets
4. Best for Beginners: AvaTrade
- Best For:Non U.S. Forex & CFD TradersVIEW PROS & CONS:securely through AvaTrade's website
AvaTrade offers multiple trading platforms, including the ubiquitous MT4/MT5 platforms, which are renowned for their algo trading capabilities. Its proprietary trading platform, AvaTradeGo, also spots powerful algo trading features. AvaTrade's easy-to-use platforms make it the ideal starting point for new traders.
Pros
- Excellent social trading feature
- Multiple trading platforms to choose from
- Demo account for practicing
- Quality educational materials
Cons
- Unavailable to U.S. traders
- Slow deposit and withdrawals
5. Best for Advanced Traders: Interactive Brokers
- Best For:Active and Global TradersVIEW PROS & CONS:Securely through Interactive Brokers’ website
Interactive Brokers offers API options for advanced traders to automate their trading. These options include the REST API, IBKR API and FIX API. Professional clients with an IBKR Pro account can access additional automated trading services. Users can build trading robots and algorithms using various programming languages on the proprietary platform.
Pros
- Powerful mobile app
- Wide range of tradable securities
- Efficient order execution
- Assortment of advanced trading tools
Cons
- Complex for new traders
6. Best for MT4/MT5 Users: Eightcap
- Best For:MetaTrader 4 and 5 TradersVIEW PROS & CONS:securely through Eightcap's website
Eightcap is a highly-rated Australian forex and CFD forex broker that offers 45 forex pairs and about a dozen CFDs. It supports MT4/MT5 platforms and offers integration with specialized tools for algorithmic trading and advanced charting. Eightcap offers integration with third-party plugins like Capitalise.ai and TradingView, making it easier for traders to use advanced algorithmic trading strategies.
Pros
- Competitive forex spreads
- Quality research and educational resources
- Optimized MT4/MT5 platforms
- Free deposit and withdrawals
Cons
- Limited forex pairs available
What is Algorithmic Trading in Forex?
Algorithmic trading is a way of using computers to execute trades automatically based on certain rules or algorithms. These rules can be based on factors like technical indicators or market conditions. Algorithmic trading is often used in financial markets, like forex or stocks, to make trades faster and more accurately than humans can. It is beneficial for big trades or for taking advantage of small price changes. To do algorithmic trading, people use special software and programming languages. Professional traders and big investors mostly use it, but individual traders can also use it through online forex brokers.
Forex Algorithmic Trading Strategies
To make the most of forex algorithmic trades, here are a few strategies you can use:
Trend Following
Trend following is a popular algorithmic trading strategy that involves identifying and following the direction of a market trend. The goal is to capitalize on the momentum of a market trend and ride it for as long as possible.
To implement a trend-following strategy, traders will typically use technical indicators or other tools to identify the direction of a market trend and set rules for entering and exiting trades. For example, a trend-following algorithm might be programmed to buy a security when its price breaks above a particular resistance level and to sell when the price falls below a specific support level.
Trading Range (Mean Reversion)
A trading range, or mean reversion strategy, depends on identifying and trading around the average price of a security. This strategy attempts to profit from deviations from the mean price, which is expected to return eventually. Mean reversion algorithms use technical indicators or other tools to identify the average price and set rules for entering and exiting trades based on deviations from it. These algorithms can be applied to various time frames and currency pairs in the forex market.
Arbitrage
In arbitrage algorithmic trading strategy, traders buy low and sell high in different markets, aiming to profit from price discrepancies. Forex traders apply algorithms that identify and take advantage of differences in the price of a currency pair on different exchanges or exploit interest rate differentials between currencies. While arbitrage can potentially generate risk-free profits, it is essential to note that opportunities may not always be available.
Delta-Neutral Strategy
A delta-neutral trading strategy involves creating a position that is not affected by changes in the price of an underlying security. By combining options and spot trades to create a delta-neutral position, traders can profit from changes in the underlying security's volatility. While delta-neutral trading can generate profits from changes in volatility, it can also be complex and involve using leverage, which can increase the risk of losses.
Index Fund Rebalancing
Index fund rebalancing is a strategy where traders can profit by capitalizing on index funds periodically rebalancing. In rebalancing, index funds adjust the composition of securities in a portfolio to maintain a desired asset allocation and manage risk and return. Algorithms execute this strategy speedily and at the best possible prices.
Percentage of Volume (POV)
The percentage of volume (POV) strategy uses a computer program to execute trades automatically based on a predetermined percentage of the volume of a particular currency pair. For example, if you set your POV to 5% for the EUR/USD pair, the algorithm will trade when the volume of that pair reaches 5% of the total market volume. This strategy aims to maximize profits and minimize risk by trading a certain percentage of the total volume.
Choosing the Right Algorithmic Trading Platform for You
When it comes to choosing the best algorithmic trading platform, there is no one size fits all approach. Decide on the most important factors you want in a broker and compare brokerages based on your needs. Additionally, the broker should be highly reliable when executing orders quickly and accurately. The broker should also offer reasonable spreads and commissions to ensure competitive pricing.
Compare Forex Broker with Benzinga’s Top Picks
Finding the right broker for algorithmic trading is an important decision that can significantly impact your success. By considering factors such as platform features, fees and customer support, you can choose a broker that fits your needs and helps you achieve your trading goals.
- Best For:Forex and CFD Trading for Mobile UsersVIEW PROS & CONS:securely through Plus500 Forex's website
- Best For:Earning Cashback on FX TradesVIEW PROS & CONS:securely through Forex.com's website
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% to 77.7% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account
- Best For:$100 Promotional CreditVIEW PROS & CONS:securely through Trading.com's website
Terms & Conditions: No deposit needed, all profits are withdrawable. Customer must maintain a verified account to qualify for one-time promotional credit. Credit is part of tradable equity but is not withdrawable until trading requirements are met. Trading Requirements: For every one lot traded, $5 credit vests into cash balance. Residual trade losses exceeding cash balance are deducted from credit until depleted.
- Best For:Spread Betting, CFD and Forex TradersVIEW PROS & CONS:securely through City Index's website
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Frequently Asked Questions
Can algo trading be profitable?
Yes, algorithmic trading can be profitable if done correctly.
How much does it cost to start algorithmic trading?
The cost of starting algorithmic trading can vary depending on the type of trading system and the broker you use. Generally, it can cost anywhere from a few hundred dollars to several thousand dollars.
Is algorithmic trading risky?
Yes, algorithmic trading is risky. Hence, it would be best to fully grasp the risks associated with algorithmic trading and craft a well-defined trading strategy before going in.
Get a Forex Pro on Your Side
FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets with low pricing and fast, quality execution on every trade.
You can also tap into:
- EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
- Powerful, purpose-built currency trading platforms
- Monthly cash rebates of up to $9 per million dollars traded with FOREX.com’s Active Trader Program
Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.
About Anna Yen
Anna Yen, CFA is an investment writer with over two decades of professional finance and writing experience in roles within JPMorgan and UBS derivatives, asset management, crypto, and Family Money Map. She specializes in writing about investment topics ranging from traditional asset classes and derivatives to alternatives like cryptocurrency and real estate. Her work has been published on sites like Quicken and the crypto exchange Bybit.