Algorithmic Trading – Automated Trading System in Forex
Nowadays our life is dominated by algorithms in the form of traffic regulating lights, social media news satisfy, aim schedules etc. More than 60 % of trade is truly Algorithm Trading. The algorithms are redesigning the traditional stocks trade in addition. The past decade has witnessed noticeable increase in popularity in Algorithm Trading.
The trade of a security applying some specific rules derived from historical information. It is an inventive kind of trade that allows a computer program to follow a specific set of rules. This set of instructions includes certain criteria for variables like time of trade, quantity and size of order, price etc. After analyzing the variables the computer program ultimately executes a trade on its own. It uses complicated mathematical and statistical formulas for decision making. clearly it saves you from mental fatigue.
thorough Learning or Artificial Intelligence:
Similarly advancement in Artificial Intelligence has also played a vital role in the ever-increasing popularity of Algorithmic Trading. thorough learning is another huge step in this regard. the time of action in which computer programmers develop program that can enhance, enhance and raise itself. You can make your investment more profitable by paying special attention to thorough learning.
Advantages of Algorithmic Trading:
It is mostly used by high profile trading firms. It is particularly profitable and advantageous for large extent orders. Institutional investors also make its extensive use to minimize the trading cost. It is streamlined course of action and serves for a number of purposes such as to create liquidity or to reduce the trading cost etc. Some noticeable and attention grabbing advantages of Algorithmic trading are:
- Faster execution of order
- Easier trade
- Rapidly and efficiently booking profits off minor fluctuations in price
- Trade of securities at limited and meager price increments
- Error free
- Free from disturbing emotions
- Less stressful
- Less trading cost
- Effective and efficient capability and skill to Backtest
- Discipline in trade
- Improves market quality and makes market broader
Disadvantages of Algorithmic Trading:
Although Algorithmic Trading is very advantageous and it has many advantages however it does not average that it has no disadvantage. Like all other supplies of income and trading systems, it also has a dark side and some disadvantages in addition.
- Too much dependence on technology
- without of control of traders
- continued monitoring
- Knowledge of programming course of action(technical skills)
- Chances of over-optimization
- Needs high- end resources
- without of consensus results in a lot of regulations
- Loses control in extreme fluctuations and irrational market conditions
- Precise life span
consequently you need to regularly monitor it so that you may never miss a good opportunity. Like all other trading systems, it also has some pitfalls but hard work in Algorithmic trading ensures huge profit, just like the saying goes “hard work pays off”.