Algorithmic trading (also called automated trading, black-box trading, or algo-trading) uses a computer program that follows a defined set of instructions (an algorithm) to place a trade. The trade, in theory, can generate profits at a speed and frequency that is impossible for a human trader.
The defined sets of instructions are based on timing, price, quantity, or any mathematical model. Apart from profit opportunities for the trader, algo-trading renders markets more liquid and trading more systematic by ruling out the impact of human emotions on trading activities.
KEY TAKEAWAYS
Algorithmic trading combines computer programming and financial markets to execute trades at precise moments.
Algorithmic trading attempts to strip emotions out of trades, ensures the most efficient execution of a trade, places orders instantaneously and may lower trading fees.
Common trading strategies include trend-following strategies, arbitrage opportunities, and index fund rebalancing.
Algorithmic trading is also executed based on trading volume (volume-weighted average price) or the passage of time (time-weighted average price).
To get started with algorithmic trading, you must have computer access, network access, financial market knowledge, and coding capabilities.
Copy Trading
Forex copy trading is a popular strategy, because price movements are often small but frequent, and constant monitoring is required. Copy trading in forex means that a trader can simply copy another trader’s positions rather than scanning the fast-moving forex markets themselves.
Why do we use it?
It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).