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Advantages of Using Trading Robots on Quantitative Hedge Funds


“The time will come when no human investment manager will be able to beat the computer,” David Siegel (co-founder Two Sigma)

Generally, hedge funds engage in investing for the long term rather than day trading. In that context, the investment requires developing a macro or microeconomic thesis, understanding the market, and utilizing this perception to employ a vision, building a position, and then comes the part of holding and managing that position for a while, for a few days to often months.

A quantitative analyst explores hundreds of different pieces of information to predict an eligible output to recognize and measure attractive long-term or short-term positions in the market. In most cases, an algorithm can process more information than human analysts and keep track of that information in its database. 

Likewise, there are some significant advantages the trading robots offer for quantitative hedge funds. They are:

Unbiased Trading Ability Based on Symmetrical Analysis:


Hedge funds fundamentally analyze and utilize the economic and financial data to evaluate the possible attempts. In the process, the entire investment method is a research-driven process that is completely based on the symmetric orientation of strategies. 

Trading robots are insensitive, impartial about information, and perform all the trades based on substantial and symmetrical data analysis. Therefore, nothing and nothing can halt trading robots from sticking to the algorithms.

The most challenging task for a regular trader is to stay on the course of discipline and maintain the strategy without getting distracted. However, a trading robot successfully remains on the trail of discipline and strategy. 

Here the hedge fund manager plays an indispensable role because the robots may burn the fund if the market responds differently than the program. In such cases, the manager makes the call and trades manually or upgrades the instructions to the robots considering the situation. Therefore, an experienced hedge fund manager with the assistance of effective trading robots can achieve a significant return.


Backtesting Capacity:

One of the most significant advantages of automated trading for hedge funds is Backtesting. It’s a method of making the robot perform on historical data. Thus, you can have the performance graph of the robot in multiple previous and various market scenarios from different times. 

In general, while Backtesting, the hedge fund managers operate the trading robot through the previous market Uptrends, Downtrends, or other sideway trends. Consequently, the outcome confers the strength of managing trades in comparable environments.


Availability of Efficient Automated Trading Solutions 


Nowadays, many trading platforms offer complete automated solutions for hedge funds. But among them, the MetaTrader platform provides the most sophisticated and efficient automated trading capabilities to operate large amounts of funds tirelessly. And the accretion of similar automated solutions making automated hedge fund management more accessible than ever. 

The MQL Market provides a collection of more than 13000 pre-made trading robots and solutions for legitimate automated trading! Therefore if you are looking for a trading-related solution, trading robot, or anything related to automated trading, the MQL community is there to assist you. 

If you are using the MetaTrader 5 for hedge funds, you are about to get the advantages of choosing from thousands of different trading robots for a very efficient trading solution.

Characteristics of The Most Profitable Trading Robot

Numerous trading robots have helped users earn a lot of money through automated trading. Also, some robots promise profit and a proficient gain in the market, although they end up burning out all the cash. Likewise, there are thousands of similar disappointments where the trader lost the investment depending on either fraudulent or unprofitable robots. 

Running a trading robot can be tricky as its algorithm determines the most reliable results from simultaneous events, and concurrently all trading robots claim to be better than the others. Therefore, the traders usually use specific indicators to find the most profitable trading robot for them. 

There are no such standards set yet to determine the most profitable robots. However, several functionalities determine the performance of a trading robot. Therefore, at this point, we are about to discuss a few characteristics an ideal trading robot should contain:


Efficient Money Management: As a trading robot remains active 24/7 and the trader not being available always creates some space for the robot to manage money. One of the most vital responsibilities of a trading robot is to take profits and stop losses. Therefore, maintaining the take-in while gaining profit and saving the account balance performing hard stop loss while losing money becomes a full-time duty for the automated system. 

AI & Machine Learning: An expert robot should be capable of identifying versatile trading market situations using Artificial intelligence. As a result, the robot would apply different patterns in trading to adapt to the sudden changes in the trading market. Whether it’s the reality or the trading market, revolution is the key to survival. 

Sustainable Profit: A proficient trading robot will provide you a regular steady flow of profit rather than forming an asymmetrical growth. Usually, a prominent trading robot should generate an 8-12% monthly gain. Somewhat robots may gain 20% or 25%, but the more steady, the better it is. 

Fewer Drawdowns: When it comes to Drawdowns, anything less than 20% is excellent for an ideal trading robot. A robust applied strategy and risk management can keep the Drawdown level between 2% to 20%. 

Bug-free Lifespan: Some very efficient trading robots often start acting differently after six months to a year. That happens because of vulnerability to bugs. Therefore, a proficient trading robot should have strong protection against bugs. Otherwise, they could take you down or even become scammers!  

User friendly: A functional trading robot should be user-friendly considering the significant numbers of beginner automated traders. 

User Reviews: The better a trading robot, the better the users speak about it. In the MQL community, there are dozens of thousands pre-made trading robots available with plenty of user comments regarding their performance and efficiency. So choose the one that comes with more positive comments.