Algorithmic Trading
This is the start of my new journey as an algo trader. I've worked a s a technical consultant for a number of consultancies like [removed for privacy] over the years and have specialized in [removed] but always had a strong interest in trading, especially applying technical analysis. So before a new family comes along and knowing how hard it is to make it as a trader I thought now would be the best time to cross the line before my wife and I start a family.
What is algorithmic trading ? In my own words, I believe algorithmic trading to be the application of computer algorithms to fully automate a trading strategy. This not only includes generating buy/sell signals but also risk and money management, stop loss calculation and exit strategies. Obviously, given the range of assets that can now be exchange traded, the amount of data generated by these exchanges there is massive scope for unleashing a creative, artisitic system design combined with knowledge of programming languages like C, C++, VBA, Java... etc. When you consider its also possible to create Perl based text processing systems for heuristic textual recognition, its also possible to incorporate fundemental analysis into a trading strategy. Algorithmic trading to me is the natural progression for the technical trader who incorporates technical analysis into their trading using for example, Excel spread sheets (at is most basic level) to analyse price action and generate buy/sell signals and order generation.
Algo trading as a profession incorporates many of the features of enterprise systems design. There is the high level analysis, requirements definition, programming of the system into modules and then back testing. Back testing is the process of running the trading system through a set of data and analysing the profitability.
How did Algo trading come about? With the increases in efficiency offered by todays enterprise computing systems and increases in regulatory intervention, algorithmic trading is currently outpacing more traditional forms of trading in terms of actual growth, according to the July Issue of Automated Trader magazine (July 2006).
Some Algorithmic trading links:
http://en.wikipedia.org/wiki/Algorithmic_trading Wikipedias entry
http://softwarereality.com/soapbox/autotrading.jsp
http://www.wallstreetandtech.com/advancedtrading/directory/
What is algorithmic trading ? In my own words, I believe algorithmic trading to be the application of computer algorithms to fully automate a trading strategy. This not only includes generating buy/sell signals but also risk and money management, stop loss calculation and exit strategies. Obviously, given the range of assets that can now be exchange traded, the amount of data generated by these exchanges there is massive scope for unleashing a creative, artisitic system design combined with knowledge of programming languages like C, C++, VBA, Java... etc. When you consider its also possible to create Perl based text processing systems for heuristic textual recognition, its also possible to incorporate fundemental analysis into a trading strategy. Algorithmic trading to me is the natural progression for the technical trader who incorporates technical analysis into their trading using for example, Excel spread sheets (at is most basic level) to analyse price action and generate buy/sell signals and order generation.
Algo trading as a profession incorporates many of the features of enterprise systems design. There is the high level analysis, requirements definition, programming of the system into modules and then back testing. Back testing is the process of running the trading system through a set of data and analysing the profitability.
How did Algo trading come about? With the increases in efficiency offered by todays enterprise computing systems and increases in regulatory intervention, algorithmic trading is currently outpacing more traditional forms of trading in terms of actual growth, according to the July Issue of Automated Trader magazine (July 2006).
Some Algorithmic trading links:
http://en.wikipedia.org/wiki/Algorithmic_trading Wikipedias entry
http://softwarereality.com/soapbox/autotrading.jsp
http://www.wallstreetandtech.com/advancedtrading/directory/
posted by mw at 1:11 PM
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