Algorithmic Trading: What Should You Know?

For several years, trading has created a place for itself in the world of investment. Indeed, the evolution of the internet is a positive turning point in the expansion of trading. However, even though it can guarantee the success of savers, it must be mentioned that there are several types of trading. And today, we are going to take stock of what Trading Algorithmic

What is Trading?

Since the 1980s, Trading has been a word borrowed from English to designate buying and selling transactions carried out on the financial markets. These operations are carried out by traders from the trading room of a financial or stock market institution, or from the internet in the case of independent traders.

Trading, or market operations, is the activity of buying and selling assets in financial markets. The assets in question can be stocks, bonds, cryptocurrencies such as bitcoin, ethereum, but also commodities: gold, oil, etc.

Why Algorithmic Trading?

We generally speak of Algorithmic Trading, when the investment strategy is based on an electronic platform (algorithm) which makes or proposes decisions in place of an operator. Algorithmic Trading, also known as High Frequency Trading or Algo-trading is a technological tool to increase the convenience and efficiency of trading in the forex market. It is an autonomous investment strategy, because it is a way of trading in which a program (robot) is left to do.

And like any type of trading, algorithmic trading has its advantages:

  • One of the major advantages of algorithmic trading is the non-emotional side. Indeed, due to the fact that the programs have neither emotions nor distractions. Besides, computer program does not have this problem. He can trade 24 hours a day and will not miss any opportunity.

  • Trading requires an enormous level of concentration, which means that a human being must have his head in order to be as efficient as possible. However, a trading algorithm is not impacted by human problems.

  • The algorithm works as long as it is not cut. So the presence of a human is not necessary.

In conclusion, even if the latter offer many advantages since they fill many gaps specific to human beings, the presence of trading algorithms on the markets does not appeal to all traders.

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