Algorithmic Trading Software

As we all know in this online world manual forex trading has become time consuming and old fashioned task. There is one main reason behind this statement is that we are living in a world of internet revolution which allows all types of retail traders to automatically sell, buy and forecast with currency from anywhere with a single click through any brokerage account. This type of online trading done by trading robots has been assigned a different name in the dictionary – Automatic trading, Algo trading, Algorithmic trading, and etc.

Automatic traders control the financial markets. 

Professional Forex traders use a type of computer programs to buy or sell a currency for business purposes. These types of computer programs are also known as “Algorithmic trading software”. Now we are going to discuss the exact meaning of Algorithmic trading software. If you are a professional automated trader and want to start a successful automated trading, then you have to take a help from a computer product, named Forex VPS. This vital product allow automated software to take much faster decisions, than any humans can do.

Definition of Algorithmic Trading Software

Algorithmic trading is a way of automating a trading strategy using special made software and a type of trading platforms known as Algorithmic Trading Software. An Algorithmic trading algorithm is specially designed to automatically analyse price data and perform very typical calculations to predict whether price is likely to hike or go down. Basically there are two types of trading algorithm;

Fully Automatic.

A fully automatic trading algorithm is designed to automatically enter in any online trading. It automatically analysis very complex problems. It allows traders to establish specific rules for both trade entries and exits that, once programmed, can be automatically executed via a computer. In fact, roughly 75% of shares traded on U.S. stock exchanges come from automatic trading systems. Traders and investors can turn precise entry, exit, and money management rules into automated trading systems that allow computers to execute and monitor the trades. 

Pros:

One of the biggest attractions of Fully automatic trading algorithms is that it can take some of the emotion out of trading since trades are automatically placed once certain criteria are met. The benefit that they can be left to trade on their own! It can make you billionaire if the logic is correct. Unfortunately it is not a silver bullet. There is also the 

Cons: 

Mechanical failures can happen. Fully automatics trading algorithm can also bankrupt you if there is a bug inside the logic. Check what’s happening from time to time.

Semi automatic.

Semi automatic trading algorithm performs the same complex analysis done by automatic trading algorithm but requires manual confirmation before a trade is entered. Semi-automatic algorithms looks like very reliable. Reality is different.  They are totally unacceptable for trading. Because until you confirm the deal, everything on the market has been changed. As end result the deal is not valid.  

Not recommended!

Why Algorithmic Trading Software.

Algorithmic trading is a trading variant that uses powerful computers for running complex mathematical formulas of trading. An algorithm is basically a set of directions to solve a problem. An example of an algorithm is an algebraic equation, combined with the rules of algebra. With these two elements, a computer derives the answer to this equation every time. When an algorithmic trading software has been installed it will start performing complex analysis on the price data, which will later use to take trades. 

Benefits for Traders

Trading software allow an inexperienced trader to very quickly benefit from the complex analysis that the algorithm provides. Thus, Algo trading uses much more complex formulas that are combined with mathematical models and human oversight, for making decisions about buying or selling financial securities on an exchange. Algo traders often use high-frequency trading technology, which allows a firm to make tens of thousands of trades per second. Hence, Algo trading can be used in various situations, including order execution, arbitrage, and trend trading strategies.

Use Of Algorithmic Trading Software.

Algorithmic trading software is widely used by investment banks, small financial institution, pension funds, mutual funds, and investor-driven institutional traders, to divide big trades into several smaller trades units to manage market effects and risk. Algorithmic trading software may also be used in any investment planning or trading plans, including making trade market , inter-market extension, buying and selling of securities, or pure supposition (including trend following). The investment decision and implementation may be implemented at any stage with algorithmic support or may operate completely automatically.

Verdict

If you are interested in using a trading algorithm also called “trading robot” or “trading system”, then your first step would be to buy good well tested software. There are many softwares available. Of course be careful and avoid scam offers. Once you have a software. You need the best forex vps hosting that supports your application. My personal favorite for algorithmic trading is NextPointHost. I have had great results with their system over the last three years.

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