Algo Trading Machine-Can Home Based Stock Traders Compete With Algorithmic Trading?
Read this Algo Trading Machine FREE PDF. Learn how to avoid the next stock market crash with the Portfolio Prophet. Watch these Instant Options Profits videos FREE. “Algorithmic trading”, or “Algo Trading” means utilizing the power of computer software to analyze and trade the financial markets automatically. These are strategies designed to minimize risk and extract profits from financial markets using mathematical calculations, which work out when there are trading conditions which are favorable for entering trades.
These computer software enable financial institutions to enhance their trading, and even replace some of their human traders. For example, in cases where human traders are not quick enough to act on price changes, contrary to the lightning fast reaction speed of computers, or when the calculations are complex and far beyond human abilities. Algo trading has been extensively used by large banks, financial institutions and hedge funds, to trade stock markets as well as commodities, indices, bonds and currencies (Forex).
Automated Algo trading is known for its unique advantages over human trading. Since computers make all the decisions and operations, it eliminated the human error factor. All calculations and analysis are done with the utmost precision. Therefore, they are considered less risky than human trading. The systems analyze and trade 24/7, and computers do not get tired, aggravated, stressed or go on holidays and sick leaves.
Computerized trading has actually been around since the middle of the last century, in some form or another. However, it has exploded in popularity in the last 10 years. AS technology advanced, they become far more accurate and sophisticated, which expresses itself in the bottom line of profits vs risks.
In some of the financial markets today, more than 90% of the daily transactions are generated by automated Algo Trading software. Since the “trading brain” is coded and automated, it has opened up the doors for many more people to enjoy the power of professional trading, even if they are not trading experts themselves.
Such a strategy, which enabled home-based traders for the first time an access to pro-grade Algo Trading, can be found in Algo Trading Machine where a strategy used by hedge fund for years, generates trading signals which can be followed by home-based traders.
Can home-based investors compete with algo trading? In the last decade, Algorithmic Trading software, also known as “Algo Trading”, has become increasingly popular. Leading investment banks and large hedge funds are using automated software to improve their profits and minimize their risks in Stocks, commodities, currencies (Forex) and other financial markets. They are investing huge amounts of money in developing high performance computers and related programs to perform the analysis and trading for them.
Algo Trading started mainly as a way to split bigger orders to hide the real intentions of the trader. But it soon developed into sophisticated market-beating algorithms analyze market data in real-time. These strategies are developed by armies of highly qualified and highly paid mathematicians, analysts and software engineers. Today it generates three quarters of the trading volume in the US.
So how does this affect the private investor? It is obvious that in today’s markets, private investors can hardly compete with the superior technical and analysis strength of the Algo Trading software employed by banks and other financial companies. A single home-based trader cannot be a match to the computer power and the comprehensive scientific research carried out by the Algo Trading teams of banks and hedge funds.