Trading by far has been one of the most tricky and unpredictable jobs. With the advancement in technology work culture is changed in every industry. Computers have completely revolutionized the world, in the sense that the work which was manually carried out is now being done in a computerized way. In order to stay ahead from the competitor’s traders are also adopting the idea of algorithmic trading.
Trading has always been a tough task now let us describes what is algorithmic trading. Algorithmic trading also called automated trading or algo trading involves a system that utilizes very advanced mathematical models for making transaction decisions in the financial markets. It is commonly used by the large institutional investors who frequently buy shares in large quantities on a daily basis. These algorithms are based on high level mathematical models.
Many firms and huge financial institutions are using algorithmic trading to improve their performance on stocks, currency and commodity markets also they are investing large amounts of money into development of technology and related programs. Initially algorithmic trading was only meant to split the bigger orders to hide the intention of the buyer but today it means a lot more. High Frequency trading (HFT) is highly popular these days. Also it is noteworthy that with the introduction of algorithmic trading private investors need to be extra cautious. As there is no way that private investors can compete with the high technical strength of big financial companies. Hence these investors cannot make money based on the previous information.
The basic idea behind it is to make money when it is the right time and before anybody know’s that it is possible. Let us talk about adoption of the technology; fund managers are hunting for the ways to upgrade the trading technology. In this respect many Phd’s and mathematics scholars have been engaged in to develop more advanced strategies to help in making financial decisions.
Algorithmic trading has been a huge success as it provides quick returns.Algorithmic formulas are designed based on the historical market data and then upgrades with real time information. In this type of trading human intervention is hugely minimized and so decision making is very quick. Also as they are run by computers so chances of human errors are minimized. Although humans take the risks of seeing the potential future which is obviously not done by the trading systems.
QuanInsti Quantitative Learning Pvt Ltd is a Mumbai based training institute specialized in providing courses in algorithmic trading. The Executive Programme in Algorithmic Trading is a unique course that covers the following topics- Statistics & Econometrics, Algorithmic Trading Strategies, Financial Computing & Technology.