Algorithmic Trading System; Here’s what you need to know about that strategy
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Algorithmic Trading Strategies
What is algorithmic trading? Algorithmic trading is a method in which the trader uses computer programmes to enter and exit trades. The trader will code a set of rules and conditions for the computer programme to act on. Algorithmic trading is also known as algo trading, automated trading, black-box trading, or robot trading.
Most algo trading strategies try to take advantage of very small price movements in a high-frequency manner. Many new traders are enticed by having algorithmic trading strategies to enter and exit trades when they are not there. Unfortunately, the lure of riches in algorithmic trading lends itself to many trading scams so beware.
While there are certainly more failed algo trading strategies than successful ones, there are a number of traders who manage to harness the power of algorithmic trading with discretionary, human trading. Many traders will use investment algorithms, or stock market algorithms, to help search for certain fundamental or technical conditions that form part of their trading strategies.
In effect, the algorithm acts as a scanner of potential markets to focus on. The trader can then focus on analysing the rest of the chart, using their own strategy methods and trading techniques.
For example, the Admirals Premium Analytics section uses algorithms to help identify technical analysis events on different markets such as stocks and forex. Below is a screenshot showing the Featured Ideas section.
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