Search results
Results from the WOW.Com Content Network
Examples of strategies used in algorithmic trading include systematic trading, market making, inter-market spreading, arbitrage, or pure speculation, such as trend following. Many fall into the category of high-frequency trading (HFT), which is characterized by high turnover and high order-to-trade ratios. [ 7 ]
Around 2005, copy trading and mirror trading emerged as forms of automated algorithmic trading. These systems allowed traders to share their trading histories and strategies, which other traders could replicate in their accounts. One of the first companies to offer an auto-trading platform was Tradency in 2005 with its "Mirror Trader" software.
Since even Smart Order Routing can be considered the simplest example of algorithm, it is reasonable to say that algorithmic trading is a logical continuation and an extension of Smart Order Routing. This is a common example of a simple Smart Order Routing strategy.
Mathematically speaking, the strategy is to find a pair of stocks with high correlation, cointegration, or other common factor characteristics. Various statistical tools have been used in the context of pairs trading ranging from simple distance-based approaches to more complex tools such as cointegration and copula concepts. [3]
The language was originally intended to allow creation of custom trading strategies by traders without specialized computer training. Simple practical commands may consist of regular English words, which makes some of the basic elements of EasyLanguage more intuitive to learn than more complex programming languages. [3] Example:
This options trading strategy is the flipside of the long put, but here the trader sells a put — referred to as “going short” a put — and expects the stock price to be above the strike ...
The trading strategy is developed by the following methods: Automated trading; by programming or by visual development. Trading Plan Creation; by creating a detailed and defined set of rules that guide the trader into and through the trading process with entry and exit techniques clearly outlined and risk, reward parameters established from the outset.
Plus, many brokerages now offer commission-free trading, making self-directed investing highly cost-effective. Dig deeper: Secure and steady returns: 7 best low-risk investments for retirees