The First Law of Algotrading: Trading bots must trade better than humans. Interview with Yuri Dernov, Easy Trade Station founder and CTO of 1ex Algo
Algotrading or algorithmic trading is a type of trading, where transactions are made automatically, according to a pre-written algorithm. Algotraders trade using robots in all financial markets: stock, commodities, FOREX and cryptocurrencies.
History of algorithmic trading
The first attempts to develop an algorithmic trading system were made back in the 1970s on the New York Stock Exchange. Enthusiastic traders were actively looking for ways to automate the trading processes, despite the scarce technological arsenal.
Countless attempts and studies culminated in the launch of the first algorithmic trading system in 1971 on NASDAQ - which is considered the beginning of the history of algorithmic trading. In 1991, algorithmic trading systems became popular among professionals - with every year bots became more and more stable, while their functionality became wider and more convenient.
Algotrading. New level
At the dawn of the 90s, only institutional investors could deal with algorithmic trading - the market participants with small capital had no access. But in the next 10 years, this direction will become more accessible and popular - in 2000, 10% of all deals on the U.S. stock market will be made by robots.
In 2020, according to a U.S. Securities and Exchange Commission (SEC) study, the share of trading bots on U.S. stock exchanges was 60-70%. Today, that figure may be as high as 86%.
With the development of the cryptocurrency market, the topic of trading algorithms is gaining even more popularity in the trading community. In order not to get lost in the concepts and to understand the intricacies of algorithmic trading, we contacted Yury Dernov, the creator of the ETS algorithmic platform and CTO of 1ex Algo.
How popular is the topic of algotrading? Is it a promising direction?
Algotrading is the Future. And this is a fact, not a supposition. This direction has always enjoyed popularity, but it is important to understand what algorithmic trading is.
Now the market offers a huge number of ready-made robots with high monthly profits. Such projects have nothing to do with algorithmic trading, nobody will sell a "chicken, that lays golden eggs". Scammers of all kinds and formats are very active in the investment field, and you know it.
In reality, algotrading is not an easy way to a stable income. But with a team of experienced managers and programmers, this way will be comfortable and short.
To be frank, algotrading today is a phenomenon of one of two kinds:
- "Algotrading" – Fraudulent projects with "high monthly returns", where algotrading is in the form of “press the button to launch the robot.
- Algotrading – Niche professional products for trading strategies automation.
Yuri, how long have you been in algotrading?
I've been in the financial markets and trading since 2006. I have been developing algorithmic solutions since 2008. In 2014, together with a small team I launched my first resource for traders - Easy Trade Station, where users could download the system of risk management and trading robots with open source code, created based on the strategies of world famous traders.
How did the resource develop further?
From 2014 to 2023 we actively developed our products, expanded our team - today we have more than 40 people on staff, and we have released more than a hundred updates. In 9 years we have developed more than 3,000 custom trading bots, our algorithmic trading solutions are used by more than 5,000 people every day.
In its essence ETS is a multifunctional program complex for trading strategies creation, testing, optimization and analysis.
What is the peculiarity of your software solutions?
You can create a trading robot without any knowledge of programming or in C# language;
The system allows thousands of robots to work simultaneously. The processing speed of the algorithms is 0.2 milliseconds;
You can simultaneously work with different crypto-exchanges, such as Binance, Bitfinex, Bybit, Gate.io, Huobi, Kucoin, Okx, etc. Terminals for trading on the American stock market (IbTws Interactive Broker Trader Workstation) and on the Russian stock market (QUIK, Transaq Connector) are supported;
With ETS you get the possibility to automate the full strategy analysis cycle (enumeration of all specified timeframes, symbols, InSample/OutOfSample periods) and output the data in the report according to the standard strategy evaluation script or your own script;
Fully automated process for optimizing algorithms created with machine learning.
Portfolio testing, optimization and management.
To summarize, the main advantages of ETS are flexibility, speed and versatility.
Yuri, you said that you were actively developing the Easy Trade Station resource until 2023. Are you not updating the resource now?
We understood long ago that the needs of professional traders have gone far beyond algorithmic solutions. For the last two years we have been working on a complete trading solution and have created a full-fledged multifunctional platform for trading under the brand name 1ex Trading Board.
1ex is a unique product on the market that allows trading from a single window. Algorithmic platform, SMART DOM, AI News and high-quality risk management system - we have combined all solutions on the 1ex centralized cryptocurrency exchange.
We also plan to develop machine learning – it will be presented as an additional service within 1ex Trading Board. The user will not need to look for patterns on the chart, just send the data to the system. In the output the trader will receive the patterns the system has found.
You have said that this product is designed for a professional audience.
That's right, our clients are proprietary trading companies, funds, family offices, brokers. But we certainly look at the mass market. We plan to become, to some extent, a guide to the world of professional trading. We even want to start our own academy.
Yuri, I think that everyone is asking this question. Do you think that algorithms will replace human traders?
Large funds and banks, such as Goldman Sachs, have already cut more than half of their traders. These vacant positions are being taken by the programmers. Manual trading is becoming a thing of the past, to be replaced by Trading Robots, capable of making 1000 trades a second on a huge number of instruments. An army of bots can trade without stopping or getting tired, and only one person can manage this army.
I believe this evolution is for the best. "A machine can't go up against its creator if it's properly designed."
CTO Algo direction 1ex trading board
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