Ready to grab some automated trading idea and boost your trade-in advanced level.
Awesome!
Let's get started!
Many traders consider coding to be an optional skill because many free-selling algorithmic or automated trading programs are available on the market. However, learning code gives traders some basic benefits.
The most important thing among them is that he will at least be able to understand the code that he is spreading.
But learning code offers several other benefits too.
First, if a trader knows how to develop a strategy, he can reduce dependence on others, resulting in a faster and more accurate spread of his strategy.
Two, the automated trading strategy, which is secret sauce and intellectual property, remains with it. When a trader hands it to someone for coding purposes, there is always a risk that it can be stolen.
Most traders now prefer to use Python. This is the most popular programming language in financial markets throughout the world.
If all this sounds scary, don't worry because it's not difficult to get this skill. Free and paid professional courses are available that can help you understand the stock market and guide you to develop unique algorithmic trading strategies.
Retest your strategy:
After you make your own strategy, you need to test it. You need a back-testing platform to test whether the trading strategy you want to use is a winner.
If the algorithm can retrieve historical data provided by the back-testing platform and produce a good return from it, then that might be a good strategy.
However, you must be careful not to adjust the algorithm to match the data, because it can affect its proficiency after being applied in direct trading.
If you are still worried about being an algorithmic trader, there is a stock market simulator available on the internet that allows you to practice your trading strategy in the direct market.
You can practice for a while to make sure your strategy is successful and then start trading right away with greater confidence.
After retesting, you can move on to the final step, which is direct trading. At present, there are several brokers who provide a platform where you can set your algorithmic strategy and start trading.
Finally, many people harbor the misconception that someone needs a lot of capital to start algorithmic trading. This is not true. You can start automated trading (FIX API) even with a modest amount. Only if you are interested in high-frequency trading to do you need a large amount of capital.
The advent of technology and data science is changing the way various industries work. In the coming years, they will play a big role in the financial markets too. If you can master quantitative and algorithmic trading now, you will explore waves that come easily, instead of being hit by changes that you cannot understand or handle.
Programmed to make a profit:
The advantage of ALGO trading is that once the signal is generated, the order is executed. Here's how it works:
1. There is no lag time.
2. If you do it manually, first you get a trigger/signal, then go to the broker account and enter the order, all of which takes time.
3. Human emotions are not involved. Once, for example, stop loss is set, algo execute it blindly. Retail investors can avoid ordering losses because of a phenomenon called loss avoidance.
4. If the system is tested properly with a withdrawal (the level of loss you can make) calculated during the test again, you know how likely it is to do it.
5. You can improve your position. If you make a profit in your previous trade, some of it can be used in your next trade. Thus, even positioning can be done automatically.
I'd love to hear what you think about the automated trading system.
