What is Algorithmic Trading
Algorithmic Trading can be called:
- Algorithmic Trading
- Quantitative Trading
- Algo Trading
- Quantifiable trading
- Trading with an algorithm
- Quantitative analysis
Algorithmic Trading, in a nutshell, is trading strategies based on quantitative analysis. It is your trading plan put to code. It is like you teaching a computer to tell you what to trade.
It is like you teaching a computer to tell you what to trade.
Your trading software generates signals based on your trading strategy. How cool is that?
The software scans the markets (your data) you have identified for trading opportunities. You could never scan the number of stocks a computer can each night.
Quants (Quantitative traders) take advantage of the tools available to us today to make fact-based, rational and well thought out trading decisions. Are you taking advantage of these tools? If not do other traders have an edge over you?
QiT’s algo uses a computer program that has been coded to follow a defined set of instructions for:
- Placing a trade order
- Exiting an open position
- Managing open position – hold or exit
If you want to sound like a geek
Now if you want to sound like a geek you can say it is: A static model (the algorithm) scans dynamic data (end-of-day data) resulting in a trade list – a list of signals for trading the next day. Since the model is static and the data is dynamic, the trading system performance depends on the synchronization between the model and the data. Changes to either the algorithm or the data will result in new signals. The data creates new signals after nightly updates.
“We don’t have to be smarter than the rest. We just have to be more disciplined than the rest.” Warren Buffet
We’re the Plan in “Plan your Trade and Trade your Plan” TraderJanie
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