Basics of Algorithmic Trading: Concepts and Examples

 By Investopedia - 2021-02-05

Description

Algorithmic trading provides a more systematic approach to active trading than one based on intuition or instinct. Here’s how it works.

Summary

  • Basics of Algorithmic Trading: Reduced the possibility of mistakes by human traders based on emotional and psychological factors.
  • Percentage of Volume (POV) Until the trade order is fully filled, this algorithm continues sending partial orders according to the defined participation ratio and according to the volume traded in the markets.
  • Technical Requirements for Algorithmic Trading Implementing the algorithm using a computer program is the final component of algorithmic trading, accompanied by backtesting (trying out the algorithm on historical periods of past stock-market performance to see if using it would have been profitable).

 

Topics

  1. Stock (0.63)
  2. Management (0.04)
  3. Security (0.04)

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