Algorithmic Trading- Is it the New Artificial Intelligence for Investors?

artificial-intelligence

Algorithmic Trading has come a long way, from reading the tick data days to being latest buzz on the trade markets. Has your firm captured the essence of this new artificial intelligence?

The black-box trading was a hush-hush scenario until a year ago, as only a few trading firms offered them to their clients.Nevertheless, today, you can receive a bevy of free algo trading. Therefore, when a firm announces the discovery of the next generation of trading platform, the financial services industry ears perk up. Here it is about interpreting newsflow the moment it is delivered from the horse’s mouth.

“A client depends on a sell-side firm to execute its order on its behalf according to certain benchmarks. But, when it comes to a strategy, the Algorithmic Trading system actually generates the orders. Some hedge funds do this.”

For level-one sell side firms, automated trading has become a crucial part of their existence. These firms employ algorithm trading as the basic strategy to gain momentum in the markets across the globe.

How does this artificial intelligence work? Algorithmic trading is standardized by Volume-weighted average price (VWAP) it divides the total value of trades by the total volume over a period. Interestingly, European-banking conglomerate UBS utilizes algo trading for its 40% clientele. Other giant corporations who are testing the unique capabilities of robo trading include JPMorgan Chase, Credit Suisse and Dresdner Kleinwort Wasserstein.

You think only brokerage firms and banking institutions are eagerly investigating the technology?

Dow Jones the financial news boffin is secretive about performing tests on the news-reading solution with several chief sell side firms. Meanwhile, Thomson Press corroborates- it is examining the concept with clients.

Despite the term “newsflow algorithm” akin to Algorithmic Trading, it is believed that the system will hold an immense value to the financial industry for order-generating strategies. The automated trading will consider newsflow amongst a wide array of information available for influence trading activities.

Volume and time are important factors considered by a simple algo trading. Conversely, complicated algorithms would allow several hundreds of real-time factors to arrive at a profitable investment decision. For instance, Credit Suisse swanks about an automated trading system that takes care of 3,000 data points every 10 seconds.

One-third of European and American stocks were driven by autopilot i.e., algorithms in 2006. In 2009, HFT firms accounted their 73% of US equity trading volume to the artificial intelligence.

NASDAQ, BATS and Direct Edge have gained a larger market share as compared to NYSE. Their success is attributed to algorithmic trading that enables them to reduce processing fees and commissions.

Thus, the development of automated trading has prompted a reduction in trade size and increased trade volume, leading to investment that is more profitable. And, profitable investments obtain a larger chunk of market share for automated brokerage and financial firms, as compared to old school of thought.

20 thoughts on “Algorithmic Trading- Is it the New Artificial Intelligence for Investors?

  1. Appreciating the time and effort you put into your blog and in depth information you provide.
    It’s awesome to come across a blog every once in a while that isn’t the same old rehashed information.
    Fantastic read! I’ve saved your site and I’m adding your RSS feeds to my Google
    account.

    Like

  2. I love your blog.. very nice colors & theme.
    Did you create this website yourself or did you hire someone to
    do it for you? Plz answer back as I’m looking to design my own blog and would like to find out where u got this from. kudos

    Like

  3. Good site! I truly love how it is easy on my eyes and the data are well written. I am wondering how I might be notified when a new post has been made. I have subscribed to your feed which must do the trick! Have a nice day!

    Like

  4. Hi there! Do you know if they make any plugins to help with Search Engine Optimization?
    I’m trying to get my blog to rank for some targeted keywords but I’m not seeing very good gains. If you know of any
    please share. Many thanks!

    Like

  5. magnificent put up, very informative. I ponder why the other specialists of this sector don’t understand this. You must proceed your writing. I am sure, you have a great readers’ base already!

    Like

  6. Thank you for every other great post. Where else
    may just anyone get that kind of info in such a perfect way
    of writing? I’ve a presentation next week, and I’m
    on the look for such information.

    Like

  7. Very great post. I simply stumbled upon your weblog and
    wanted to say that I’ve truly loved browsing your weblog posts. After all I’ll be subscribing
    for your feed and I’m hoping you write once more very soon!

    Like

  8. My brother recommended I might like this blog. He was totally right. This post truly made my day. You cann’t imagine simply how much time I had spent for this information! Thanks!

    Like

  9. magnificent post, very informative. I wonder why the other specialists of this sector don’t notice this. You must continue your writing. I’m sure, you have a great readers’ base already!

    Like

  10. Nice read. I just passed this onto a colleague who was doing some research on that. He just bought me lunch because I found it for him! Thus let me rephrase: Thank you for lunch!

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s