ALGO TRADING

WHY PROGRAM TRADING?

Traders themselves are often their own worst enemies. That's because they allow their emotions to get the best of them when it comes to making financial decisions.

Having a disciplined trading strategy differentiates the professional from the do-it-yourself trader. A trading strategy does not have to be complicated. It helps provide focus and ensures emotions are held in check when making decisions.

There is no shortage of strategies to choose from when buying and selling stocks. Countless books have been written describing many strategies in detail. Each type of strategy will have its proponents, but any logical, rational strategy that is followed consistently is always better than no strategy at all. The value is in the disciplined approach a strategy provides.

Again, most of the time, the value of a trading strategy is not in the strategy itself, but in how it is followed and implemented.

The Bottom Line

Devising the strategy is important but having the discipline to follow a trading strategy is more important. Equally important to any strategy, is determining what to manage yourself and what to delegate to others.

Program / Algorithmic trading

Algorithmic trading, also called automated trading or algo trading, is the use of electronic platforms for entering trading orders with an algorithm which executes pre-programmed trading instructions whose variables may include timing, price, or quantity of the order, or in many cases initiating the order without human intervention.

Once we have trading strategy in place, we need to execute the same with great discipline. Further, if our strategy involves taking benefit of small movements of the market at high speed, it becomes humanly impossible to execute the same. Program trading can not only help us to maintain the discipline over long period of time but can also execute trade at very high speeds and thereby enabling us to take benefit of small movements.