Algo Trading

How algorithmic trading services works

No matter what knowledge and skills humans have, it is impossible for them to compete with computers in data analysis. Machines easily outpace humans in terms of speed, accuracy, and productivity. This, of course, applies to such an industry as trading, where automatic trading services play a huge role today.

Therefore algorithmic trading attracts more and more traders. The application of a well-thought-out system to the financial market allows them to save time by reassigning part of duties to a trading robot.

The concept of algo trading

The essence of automated trading algorithms is the automation of routine actions that traders perform in the case of manual trading. For example, the system executes a large order, breaking it down into smaller pieces. To do this, instructions with price changing, technical analysis, division algorithms, and other parameters are used, according to which the conditions of orders execution are determined.

Algo trading has undeniable advantages:

  • There are no physical limitations because the program does not need to spend time on anything else but work.

  • Programs are not subject to emotional breakdowns, fatigue, and so on.

  • Programs strictly and steadily follow the algorithm.

The use of automatic trading algorithms is widespread not only among traders but also on the interbank foreign exchange market.

Trading robots and API technologies

Trading robots are special programs that perform all tasks of algo trading. To start automatic trading, you can create or buy a trading robot. However, while even novice traders can use a ready-made trading robot, such a program should be developed by an experienced specialist. Its effectiveness depends on the correctness of the algorithm, so the programmer will need a deep knowledge of the features of the trading system, the ability to use testing systems, as well as the ability to quickly identify and eliminate errors.

Speaking of trading robots, it is necessary to mention the API for trading (Application Programming Interface) technologies, since it is practically impossible to work without one. In short, API - is a special protocol for the interaction of computer programs that allows you to use the functions of one application inside another one. For example, you can make your trading robot work directly with the broker's servers. This allows him to quickly receive the data about the trades and the current account status, then to process this data and generate buy or sell orders based on them and after that to track their execution. Also, it can be used for stock automated trading. Almost all exchanges provide stock trading API, so it is widely used.

Algorithm stock trading will also help to analyze huge layers of information on various cryptocurrency exchanges and find the best offer, and then conduct a buy or sell transaction.

Algo trading platforms

For those who are not going to create their own robots or personal algorithmic trading, the ideal option would be to use a special platform for algo trading. The use of such platforms does not require knowledge and skills in programming, which means that it is very easy to learn how to build the simplest trading robots and to obtain the necessary initial skills for further development in this area.

However, a trading platform with API is intended not only for ordinary traders who do not have deep knowledge in programming but also for professional programmers. For the first ones, the trading APIs is a good opportunity to learn something new and to try out some strategies. For the latter, it is an additional source of income.

The platform can be of three types:

  • Computer program. This is the version with the most features. It is used as the main option.

  • Application for a smartphone. The possibilities are limited due to technical features and more suitable for controlling open positions when a person is away from the computer;

  • Web-version for browser. Also usually limited to basic functions and used mainly for monitoring current positions. But recent trends show that this version is becoming more and more functional.

Popular platforms are often implemented in all variants for the convenience of the user. This allows the user to work at home on the computer, and away from it to monitor the orders in the mobile application. In this way, the trader is always in control of the situation.

To sum it up, algo trading with all its functions will be a great helper for every trader. The automated system does not get tired and does not give in to emotions, so you can mind your own business, while the algorithm selects and concludes the deals. Naturally, the program must be periodically monitored, because it is not insured against technical failures.