Algorithmic trading strategies

How does algorithmic trading work?

Features of algorithmic trading in different markets

  • Strategies based on technical analysis. In this case, the trading strategy is based on searching for patterns and inefficiencies using analytical tools;
  • Front-running algorithms track large volumes by monitoring information in the order book, order tapes, and charts. Based on the collected data, the system evaluates where the stock price will move and how the price will behave in a similar situation is repeated;
  • Pair trading, which implies the selection of two instruments, is selected, one of which is leading, and the second may be underestimated.
  • Market-Making strategies. Market makers need to buy securities and hold them in their accounts so that individual traders or hedge funds can buy them in the future. Players that adhere to this strategy aim to provide liquidity for trading instruments.
  • Volatility trading. To predict price volatility for certain assets, you need to use analytical tools. Such strategies are usually given by professional investors who incorporate their knowledge into the algorithms of trading robots.

Choosing the direction of trading

Benefits of algorithmic trading

  • Convenience
  • Without emotions
  • Speed ​​and accuracy

Disadvantages of algorithmic trading

  • Algorithmic trading software errors
  • Regular monitoring required
  • Not suitable for beginners

Main algorithmic trading strategies

  • Using Moving Averages in algorithmic trading




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