What is an algorithm
The algorithm is expressed as a coherent finite set of operations, whose beginning and end are decided to solve a specific problem. Within the light of the accessible information, the most reasonable strategy is chosen, and the things to be done are revealed step by step. Algorithms can be characterized by computers using a programming language. The word algorithm comes from al-Khwarizmi, who was born in Hive, present-day Turkmenistan. We see that many sorts of algorithms encountered in computers, which now possess an indispensable place in our lives, are getting to be noticeable in the investment arena. Technological advancements can moreover give advantages in financial markets thanks to algorithm.
Algorithmic trading is the automatic execution of trading transactions in financial markets using computer programs that include mathematical modeling and calculation algorithms, at the right time, the right amount, and the best price.
The innovative infrastructure and opportunities created within the last 20 years have provided various advantages in the financial markets, as in nearly every sector. Considering that even seconds are significant, especially for investors trading in money markets, making manual (manual) exchanging may cause delays, even though the investor can wait in front of the computer and press the key right away.
At this point, “algorithmic trading” comes to the aid of investors. In the complexity that occurs in the market where hundreds of data flow and affect each other at every moment, algorithms draw a roadmap, enabling investors to display a higher trading performance.
When we say algorithmic trading, automated trading, black-box transactions, or algo, it is understood that a for-profit securities transaction is carried out by computers concurring to predefined criteria and commands. An algorithmic exchange can be as essential as “put a purchase order in case the cost rises over the moving average” or sometimes it can be in more complex forms such as entering purchase or sell orders at different costs and canceling them without waiting for them to happen.
The use of algorithmic transactions by individual investors in recent years constitutes about 70% of the yearly transaction volume in stock exchanges such as the American stock markets (New York Stock Exchange) and the London Stock Exchange.
What are the Advantages of Algorithmic Trade
A. Faster, speed increases as technology advance.
B. There is no need to sit and follow the screen.
C. Algorithms work whenever you want.
D. It puts an end to confusion and dilemmas.
E. It allows you to analyze according to historical data.
F. It provides an opportunity to use different strategies together
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