Learn the basics of algorithmic trading and its importance

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Have you been trading crypto for a while and wondering how you can improve your results and increase your income? Are you curious about all the necessary skills, platforms, and tools that will be worth their weight in gold in your daily trading experience?

First, you must use proven platforms if you consider a long-term and successful crypto trading career. In the quality BitiCodes review, you will see all the features that a top trading platform must have to help you in trading.

In the following article about algorithmic-trading, let us find out all the basics about it, shall we?

Algorithmic trading – explained.

For all those who are serious about trading in the cryptocurrency market, they should know how useful algorithmic trading in the platforms they use is for them. First, it represents a specific ordering method with pre-programmed and automated trading instructions. These instructions account for the following variables:

  • Volume
  • Time

This specifying trading method aims to leverage the speed and resources of computers that are proportional to human traders. It’s crucial to understand that algorithmic trading has gained popularity and traction with institutional and retail traders in the last two decades.

The term “Algorithmic trading.”

“algorithmic trading” is commonly used synonymously with “automated trading system.” It encloses numerous trading strategies that are usually based on mathematical results and formulas and that rely on specialized software.

Who is using algorithmic trading the most?

Mutual funds, pension funds, investment banks, and hedge funds are those that are widely using algorithmic trading. However, all these funds and investment banks could need either:

  • Perform trades too fast for other human traders to react to
  • Spread out the implementation of a bigger order.

According to one study from 2019, about 92% of trading in the Foreign exchange market, for example, was performed by algorithmic trading rather than trading by real human traders.

What do strategies in algorithmic trading include?

To better understand algorithmic trading, it is useful to know all the different strategies that use it entails. Those are:

  • Market making
  • Systematic trading
  • Arbitrage
  • Inter-market spreading
  • Trend following.

Many are within the “hi-fi trading (HFT)” category. This category is usually characterized by the following:

  • High turnover ratio
  • High order-to-trade ratio.

HFT strategies

Keep in mind that HFT strategies usually use computers that create complex decisions. These decisions then initiate orders that are based on electronically received information before any way for human traders to process the information they observe.

Also, HFT, along with algorithmic trading, has resulted in an enormous change in the market microstructure and the uncertainty and complexity of the overall market macrodynamic.

Conclusion

Algorithmic trading is important for selected platforms because it facilitates daily trading for serious traders, producing accurate results in a short period. Therefore, serious traders are advised to choose platforms that have powerful algorithms and cutting-edge technology.

So, before choosing an auto-trading platform, check its features. Good luck with choosing the best auto-trading platform for your long-term trading goals in the crypto universe!

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