Trading Technology Advancement: Algorithmic Trading
Algorithmic Trading
Thousands of transaction occur every minute in an open stock market. Some of them occur through the traditional clicking method and a majority of them happen automatically. This automation process is called Algorithmic Trading.
What is algorithmic trading? It is the execution of trading order according to a set of specification and parameters that occur instantly without any human intervention. This set of trading parameters are predetermined complex formulas combines with mathematical pattern or trend allowing prediction of action.
Benefits of Algorithmic Trading
Trading with algorithm provides the advantage of:
Speed that is faster than what humans can attain
Additional opportunities with simultaneous checks on multiple market
Trade accuracy with instant execution
Reducing risk caused by human emotion
Reducing transaction cost
Manpower with lesser supervision needed
Back-testing using available historical and real-time data
Examples of Algorithmic Trading Strategies
There are many different strategies identified in algorithmic trading. The common trading strategies used are:
Weighted Average Price Strategy
Arbitrage Strategy
Mean Reversion Strategy
Trends Following Strategy
Percentage of Volume Strategy
Do-It-Yourself Algorithm
In the recent years, technology have rapidly evolved and many individuals have make use of available historical and real time date to back-test algorithms leading to a rise in DIY quantitative strategies. Traditional click trading are slowly evolving to algorithmic trading.
Currently in Singapore, TradingPLC is co-organising an Algo Trading Challenge from 20th Aug to 30th Oct 2021, where people from all walks of life can enter the competition to win cash prizes. Other than cash prizes, the top 3 winners will receive a certificate and the chance of employment with organising firm.
With the trading world ever evolving, being proficient in technology is a must to succeed Click here to sign up for the first Singapore Algo Trading Challenge.