Zorro and the Brokers
Any algorithmic trading strategy needs a connection from the Zorro platform to a broker or exchange for buying or selling assets. Normally the broker also
provides live prices, price history, and other data such as order book content
or option chains. Most brokers offer free demo accounts (also called practice, paper, or game accounts) where trading can be tested without risking real money. A demo account with a broker can usually be opened in 5 minutes on their website. In most cases you'll get an MT4 account, and can start trading with Zorro's MT4 bridge.
Opening a real account for trading with real money takes longer, as the broker has to confirm your identity through some ID
and address verification process. With serious brokers, be prepared to fill in
lengthy forms about your risk preferences and prior trading experiences.
Finding a broker
Every broker uses a different trade model, offers a different universe of
assets, and has different values for spread, commission, and other asset and
account parameters. Here are some simple criteria for selecting the best broker for
small-budget algo trading:
- Market Maker / No Dealing Desk (NDD). If a broker is a
'market maker', they take the other side of your trades. So you're trading
against the broker, not against the market. Obviously, those broker do not
want you to win, even though they claim otherwise. Market maker brokers are quite common for
Forex, CFD, or
binary options. Brokers with 'no dealing desk' (also referring to
themselves as ECN "Electronic
Communication Network" or STP
"Straight Through Processing"
brokers) claim to have no such conflict of interest, since they transfer your orders to
exchanges or liquidity providers.
Therefore NDD/ECN/STP brokers are preferable to Market Makers. At least in
- Initial capital. Some brokers require a minimum initial
deposit, such as $10000. Theoretically you can immediately withdraw 90% of your
deposit when the account is opened.
Still, it is preferable to select a broker with small initial capital requirement.
- Lot size. Determines you minimum forex order volume. The
smaller, the better. Many brokers offer micro lot accounts, where 1 lot is
equivalent to 1000 forex units. Some offer nano lot accounts (1 lot =
100 contracts), and some, such as Oanda, have no minimum lot size at all.
- Leverage. The higher, the better, because you can
always reduce your leverage, but not increase it. Accounts in the US have
often lower leverage than in the rest of the world. Most brokers offer about
30:1 .. 100:1 for Forex and CFDs, and 2:1 for stocks
- Spread and Commission. Naturally, the smaller the
trading costs, the better. Especially short-term strategies only work below
a certain trading cost level. For comparing costs, a formula for commission -> spread conversion can be found under
- Customer service. It is incredible what sorts of request and
complaints come in daily on a broker's service desk. Still, the service must
react promptly and solve problems professionally. You should be able to
contact the service anytime via email or chat.
- Payment. In case you need to remargin quickly, the
broker should offer a fast way to deposit money. Bank wire transfers can
take days, money transfer via Paypal or credit card only minutes until the
balance appears on your account. Of course, the broker should also offer a
fast way to withdraw profits.
- Free subscription. Some brokers provide a free Zorro S
subscription with a new account; look under Zorro
S for details.
All brokers listed under 'Affiliate' on the
page fulfill the above criteria. If the broker offers the choice between several account types, select the account with the smallest lot size and the highest leverage. Maybe you've read in a trading book to avoid high leverage as it implies "high risk".
Not so: A high leverage account just means that you're free to determine your own leverage.
Risk comes from trading a too big volume, not from a high leverage account. Small
minimum lot sizes are preferable as you can trade with less capital and can better adjust the trade volume. For low-budget
forex trading strategies, a micro lot or nano lot account is mandatory.
* In reality, NDD forex brokers have been found to be in
control of their main liquidity provider and in this way indirectly hold
positions against their clients. Some NDD brokers are rumored to classify
their clients in categories A and B, depending on their trade success. Trades
from A-clients - usually, algorithmic traders - are transferred to liquidity providers since they tend to win.
Trades from B-clients - the vast majority - are not. You should aim for being an
Connecting to a broker
Zorro can trade with all brokers that offer at least one of the following
ways connecting to them:
- A trading API. That's a software library with direct access to the
broker's price and trading servers. The free Zorro version comes with trading
API modules for several major brokers, such as FXCM, Oanda,
IG, or Dukascopy (more broker API modules are available with Zorro S).
Just enter your user ID and password on the Zorro panel and you'll be
automatically connected. Any broker API can be relatively easily implemented with some programming knowledge through a Broker Plugin DLL.
- "Meta"-Trader 4/5 trading platform. Install the MT4/5 Bridge,
enter your account number in the Zorro user ID field and you'll be
automatically connected. Zorro runs in this mode as an
"Expert Advisor" (EA) on the platform and can thus trade with any broker that supports
that popular platform. This way you have thousands of brokers to choose from. If you have
the choice, MT4 is normally preferable over MT5.
- A web based trading platform, or a trading program where trades can be
simply placed with key strokes or mouse clicks. Zorro can control other programs by sending key or mouse commands to their user interface. In this mode, Zorro
can retrieve the current price data
from a free demo account with a supported broker A, and uses the order function to hit buttons on the web based trading platform
from your real broker B.
If your broker does not support any of those methods, you can trade manually by using Zorro as a signal provider. For this, run your strategy on a
free demo account
of a supported broker A, and enter or exit a trade with your real broker B when you see or hear that Zorro opens or closes a trade. If your strategy has not a too-short time frame, it won't matter
much when a short delay lies between Zorro's and your trade entry. Zorro plays the sound file trade.wav each time when it enters a trade, and win.wav / loss.wav each time when it closes it. Those files are located in the Zorro main folder, and you can replace them with an alarm sound if you want to get alerted every time for entering a trade.
Alternatively, Zorro can write trade signals to a spreadsheat or other file for
externally triggering trades.
Backtesting a broker
In backtests, Zorro can simulate any broker and account through asset specific parameter sets.
The broker and account specific parameters, such as rollover fee, spread, lot size, pip cost, etc. are
taken from a spreadsheet file in the History
folder. This file can be either downloaded from the broker API, or edited with Excel or with the script editor for simulating different accounts and assets. For details see Asset List.
Taking advantage of a broker
Market maker brokers can not only play tricks on you, you can also play
tricks on them. One of the most favored is broker arbitrage.
Since Zorro S can trade with several brokers at the same time, you can compare
asset prices from broker A with the same asset from broker B, and enter a long
position with the cheap broker and a short position with the other. You can
this way collect risk-free profits when the price difference must temporarily
exceeds the spread and transaction costs. Of course, brokers get upset when they learn
about those practices. So you should not actually brag about them on trader
Trading cryptocurrencies at a digital exchange
The Z10 strategy is a passive portfolio management
system for cryptocurrencies. Trading with Ethereum, Ripple, or other digital
currencies is a bit different to trading with normal assets, since you normally need bitcoin
for this. Some
digital exchanges accept funding in Bitcoin only; you'll then need to
purchase bitcoin first for opening an account with them. Here are the steps:
- Register with a bitcoin exchange service where you can buy or
sell bitcoin for dollars or Euro; examples: Coinbase™
or Bity™. Register there, enter your credit card or bank account data,
and buy bitcoin. Credit card transfers are usually more or less instant,
bank transfers can take some days.
- Exchanges can host your money, but if you don't trust
them, get a wallet for storing your bitcoin treasure on your PC.
Example: Copay™. To transfer coin from your exchange
account into your wallet, it displays a receiver address that you enter at
the service's website.
- Register an account with a digital exchange, like Bittrex™
or Binance™. For depositing bitcoin, the exchange shows you a
receiver address to which you send coin from your wallet, or that you can use as
withdrawal address for the bitcoin exchange service.
- As soon as the bitcoins appear in your account at the exchange,
you can fire up Z10 and start trading.
- For withdrawing your bitcoin profits, take the above steps in opposite
direction. Needless to say that any step usually requires a small bitcoin
Strategy, account list, broker plugin,
MT4 plugin, broker arbitrage
► latest version online