Are you new to algo trading? Here are 4 key risks one must know about
Algo trading is nothing but a series of commands defined by experts to execute a buy/sell order with predefined conditions.
As we know, the prices of financial instruments like stocks, forex, and commodities fluctuate in fractions of a second.
So, it’s difficult for humans to be present every time and monitor the prices. Therefore, this work is delegated to a machine with a set of predefined conditions.
In the world of finance, information is power. But with the ever-growing sea of financial data, turning that power into actionable insights can be an important task.
This is where algorithmic trading (algo-trading) steps in, transforming information overload into trading opportunities in a disciplined manner.
By leveraging technology and advanced algorithms, algo-trading is revolutionising the way trading decisions are made.
The strategies deployed for creating algorithms are built using different mathematical concepts and vast data interpretation. In the live markets, if the defined conditions are met, then algo will run and execute the order automatically.
However, if the conditions are not met, then no trades will be executed. Another advantage of algo is the disciplined execution of trade without involving human emotions.
Generally, algorithms process diverse data points, including stock prices, historical trends, technical indicators, price actions, etc. This type of data is very useful for defining the logical conditions for decision-making.
analysing and interpreting the data, algorithms can uncover
