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Trading with algorithms: What they don’t tell you

#AskMarcello – use the hashtag and ask me anything! I try to answer all the different questions you have about trading, traders, day trading and any other topics you might be curious to know more about!

In this video I will answer the following question – What do you think about algorithmic trading?

This is a very good questions as this is the direction where the entire industry is moving to. I have myself used and tried it. The majority of people don’t realize that the market is dynamic, it changes from one minute to the next and therefore your system has to adapt to that. That might be one problem with algorithms. Eventually we realized it took more time to teach someone to use the algorithms than to teach them to use our trading strategy, the Congressive Strategy.

Trading is a serious business and you can actually lose a lot of money if you don’t do it properly. Once you’ve found a new strategy that works well with your algorithms it’s great but once the market changes, you’ll have to adapt your algorithm strategy. After all I do not believe those algorithm systems that are being sold really work, otherwise everyone would be a trader and make a lot of money using algorithms. Unfortunately it is not that easy.

I believe everybody can learn to trade but not everyone had the discipline or patience to learn. There are no secrets, you either learn by working hard and practicing or you don’t. There are no shortcuts. Most trading academies make you believe that by buying a course you will soon become a professional trader and earn a lot of money. Be careful! It is not that easy and that is what we always tell our students. If you do it well – if you really put time and effort in it – you will be able to learn how to trade and you might be profitable. If you do it well you can earn a lot of money and live out of trading but if it were that simple everybody would be doing it.

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Trading with algorithms: What they don’t tell you

Trading with algorithms: What they don't tell you, Forex Algorithmic Trading Questions

Forex Algorithmic Trading Questions, Trading with algorithms: What they don't tell you.

Who uses algorithmic trading?

algorithmic trading is mainly used by institutional financiers and also large broker agent houses to lower prices connected with trading. According to research, algorithmic trading is particularly beneficial for large order dimensions that might consist of as much as 10% of general trading quantity.

Recommended Book for Trading Strategies

Building Algorithmic Trading Systems: A Trader’s Journey From Data Mining to Monte Carlo Simulation to Live Trading, + Website

Book by Kevin J. Davey

Front Cover - Building Algorithmic Trading SystemsDevelop your own trading system with practical guidance and expert advice In Building Algorithmic Trading Systems: A Trader’s Journey From Data Mining to Monte Carlo Simulation to Live Training, award-winning trader Kevin Davey shares his secrets for developing trading systems that generate triple-digit returns. read more…

Originally published: June 11, 2014
Author: Kevin J. Davey

Fundamentals of algorithmic Trading: Concepts and also Instances

algorithmic trading (likewise called computerized trading, black-box trading, or algo-trading) uses a computer program that complies with a defined set of directions (a formula) to place a profession. The profession, in theory, can produce profits at a rate and also regularity that is impossible for a human trader.

The defined sets of directions are based on timing, price, amount, or any kind of mathematical design. Besides earnings chances for the trader, algo-trading renders markets more fluid and also trading more organized by dismissing the effect of human emotions on trading tasks.

algorithmic Trading in Practice
Suppose an investor complies with these straightforward profession standards:

Purchase 50 shares of a supply when its 50-day relocating average goes above the 200-day relocating standard. (A relocating standard is approximately previous data factors that ravels day-to-day price changes and also thereby recognizes trends.).
Sell shares of the supply when its 50-day relocating average goes listed below the 200-day relocating standard.
Utilizing these two straightforward directions, a computer program will immediately keep an eye on the supply price (and also the relocating average indications) and also place the deal orders when the defined conditions are met. The trader no longer needs to keep an eye on online prices and also graphs or placed in the orders manually. The algorithmic trading system does this immediately by properly recognizing the trading possibility.

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