It Is Time For A Revolution In Your Trading Strategy
Money-Making Algorithms
An analogy is the best way to make complex concepts sound simple. In this regard, forex trading algorithms can be likened to an individual’s mind-set. In face of a problem, individuals choose to follow varying sets of steps in order to overcome the problem at hand. While some go for shortcuts, others might prefer to take every single possibility into account. Just like the human mind, algorithms seek to achieve a particular objective following predetermined sets of steps. When it comes to stock trading algorithms, these well-tailored “artificial mind-sets” are used to detect and implement profitable trading options in forex and stock markets.
Electronic Trading Technology
Electronic trading technology allows corporate and individual traders to make use of investment algorithm software in a bid to build a trading strategy that is automated with the help of this software. As the digital replaces the conventional in every sphere of life, trading automation has also replaced traditional do-it-yourself trading where you manually place buy and sell orders. Although the old way of trading still works, it is not practical and possible anymore to keep track of ever-fast financial movements and catch up with the enormous trading volume.
How do they work?
Money-making algorithms are not the goose that lays the golden egg though. Looking for free, quick and easy meals might be one of the gravest mistakes a trader could ever make. Therefore, it is important to understand what forex trading algorithms can do and how it does the magic. Investment algorithm software is simply the digital execution of any trading strategy or method that the trader has devised. In other words, the software is not going to have its own intuition but act on the intuition or pre-set parameters you have set out for the algorithm. To exemplify how the process works, stock trading algorithms can carry out the specific steps you believe are going to pinpoint, let’s say, the entry point into a bull market or they can warn you of an immediate possible plunge in the value of Apple shares. To further clarify the way investment algorithm software functions, say, you trade US Dollar (USD) for Gold (XAU) and vice versa. You can not only follow the real-time value of USD against XAU on a great number of websites but also use the “indicators”, which are tools for analysis, so as to figure out what is going on in the market in question. For instance, a widely-used indicator, “Moving Average” (MA) helps you see the average USD/XAU value in a given period, which you can configure as “hourly”, “daily” or “weekly” etc. Another popular indicator, “Bollinger Bands” (BB) helps you see the standard deviation and volatility in a particular market, i.e. EUR/USD (Euro versus US Dollar). While indicators such as MA and BB can be used manually, traders can also resort to computer programming in order to automate the process of drawing meaningful conclusions using these tools. Traditional traders usually count on graphics and charts to visualise these indicators and understand the output they provide.
Design your own trading robot
Taking the advantages offered by forex indicators, Forex trading algorithms that are designed through software programming can automatically run tools like MA and BB or any other indicator offered on trading websites as well as techniques you can design yourself. In other words, you can build your investment algorithm software either on existing models or from scratch. Depending on a trader’s experiences and preferences, the software can, for instance, check the volatility, the speed of change in the value, ratios between certain parameters or any possible numerical calculation that can be done on the existing forex and stock market data. In the next step, the algorithm analyses these variables and makes decisions according to the trader’s preferences. Indeed, it is the trader preferences that shape the way forex trading algorithms act.
Algorithmic trading hedge funds
Given the fact that no one is exempt from the allure of technology and digitalization, it will not be a surprise that hedge funds have also jumped onto the algorithmic trading train. Hedge funds (or to be more precise, algorithmic trading hedge funds) like “Quantopian” utilize trading algorithms, turning to the genius of computer programmers and software developers in search of the best and most effective code that will lead to the most profitable trades.
Time to build your money-makers
Considered by many finance people as the Mecca of finance, Wall Street is also investing in this ground breaking technology. Among the greatest phenomena of the 21th century, “Artificial Intelligence (AI) and Machine Learning” are destined to take algorithmic forex and stock trading to yet another level, making it possible for the trading software to improve itself and learn from the practice of trading. Just like self-driving cars, machine learning and AI promise to create self-trading robots, which can autonomously trade and make money.
A new era
Welcome to the era of “Money-making Algorithms”.
