Economy
All You Need To Know About Algorithmic Trading
There are now more options to improve or expand existing apps due to the rapid advancement of computer science and communication technology. The current developments have opened up fresh trading avenues.
Trades are placed using a computer program that follows a predetermined set of instructions (an algorithm). This kind of trading is also known as automated, black-box trading, or algo-trading. Profits may be generated at a pace and frequency inconceivable for a human trader to achieve in principle.
Just because it’s computer-driven doesn’t imply no one is involved. As a result of automated trading, human involvement has been shifted to a more back-office position, where new alpha-seeking techniques are developed on a regular basis.
High-frequency trading (HFT) is the most common kind of algo-trading today, and it relies on preprogrammed instructions to place a large number of orders quickly across a variety of markets and decision factors.
In this article, we’ll provide you with information on what are the main things that every trader should know about algorithmic trading.
How does algo trading work?
Pre-programmed instruction is used in algorithmic trading to execute transactions. Input characteristics like price, time, volume, and more are taken into consideration by these laptop applications. In order to make use of the processing power and speed of modern computers, several types of systems are employed. Automated trading is primarily a rapid, reliable, and accurate technique of placing orders. However, not everyone can apply this strategy, and some people may have doubts about its efficacy.
Because the decision to buy or sell is based only on the composite programs, algorithmic trading is a generally recognized method. There is no human intervention in making the transactions, which eliminates the influence of emotions. There are several ways to learn more about the way algorithmic trading works. One of the most common ways for investors is to visit an education section of Elite Currensea, where they can get more information about algo trading and its benefits. In addition to that, the section allows traders to generate trading strategies based on AI. Computers are better at completing tasks quickly than people are. Depending on the specifications, it can execute and monitor a variety of stocks at the same time.
There are no trades left unattended, thus it is quite skilled and resourceful. When traders take a break, the robot takes care of online share trading orders.
As a primary benefit, algorithmic trading removes human emotions from the trading process. Trades are carried out in accordance with a predetermined set of guidelines. Human trading, as opposed to algorithmic trading, is more susceptible to illogical trading choices due to human emotions. Thus, algo-trading often pushes traders to avoid taking on more risk than they can manage in order to prevent feelings of uncertainty.
For those interested in learning about algorithmic trading, the online education market has grown rapidly in the last several years. Getting into this field is now feasible without having to go through the lengthy academic path (8-10 years).
What are the main pros of algorithmic trading?
Individual involvement is minimal when it comes to algorithmic trading. Orders made on the basis of various technical indications are automatically distributed using digital means. Simple data access is all that is required for these gadgets. By not having to worry about losing money, they are safer than human dealers. Another advantage of these systems is that they may be quite profitable. However, there are several difficulties to overcome. Basic computer abilities are required for success in algorithmic trading.
Algorithmic trading’s performance is heavily reliant on precision and timeliness. The margin of error in algo trading is often extremely large if humans are involved. It’s possible for a computer to conduct transactions under a set of instructions, but this isn’t the case for algo-trading banks. As a result, strategic thinking is emphasized in order to help businesses make better, more accurate trade choices.
Moreover, there is no opportunity for traders to be influenced by their emotions since the tactics are pre-formulated. This means that once the pre-specified goals are satisfied, the deal is automatically performed, and the trader is left with no choice except to accept it as is. Over- and under-trading are kept in check by algo trading. As a result, there is no tolerance for error or divergence from the original trading plan.
A trader’s job is to identify the weak points in their trading system and devise workarounds as early as possible in order to prevent more losses. Trading algorithms allow traders to back-test their trades using historical data and compare them to the current market conditions. Using this approach, traders may determine for certain if their deals would have turned out identically.
Trading algorithms used in algo trading execute deals without human intervention. In response to market changes, the algorithm creates orders as soon as they are met. The trading process relies heavily on the quickness of entry and exit. Even a delay of a few seconds might result in losses. Better entry and exit speeds allow traders to catch market moves at their precise moment of entrance.
With the advent of automated trading, traders now have the chance to experiment with a wider range of trading platforms. Individuals and businesses may effectively and quickly exchange huge volumes of shares. Market participants may thus acquire a large number of shares and then sell them nearly immediately for a significant profit.
Algorithms and computers are used in algo trading. Because of this, executing many trades and strategies simultaneously becomes quite simple. Humans just could not have accomplished this.
By Adedapo Adesanya
Food Concepts Plc neutralized the gains recorded by three securities, returning the NASD Over-the-Counter (OTC) Securities Exchange into the negative territory with a 0.27 per cent loss on Thursday, December 4.
Yesterday, the share price of the parent company of Chicken Republic and PieXpress declined by 34 Kobo to sell at N3.15 per unit compared with the previous day’s N3.49 per unit.
This shrank the market capitalisation of the OTC bourse by N5.72 billion to N2.136 billion from N2.142 trillion and weakened the NASD Unlisted Security Index (NSI) by 9.57 points to 3,571.53 points from 3,581.10 points.
Business Post reports that Central Securities Clearing System (CSCS) Plc went down by 50 Kobo to N38.50 per share from N38.00 per share, FrieslandCampina Wamco Nigeria Plc gained 29 Kobo to sell at N55.79 per unit versus N55.50 per unit, and Geo-Fluids Plc added 5 Kobo to close at N4.60 per share compared with Wednesday’s closing price of N4.55 per share.
Trading data indicated that the volume of securities recorded at the session surged by 6,885.3 per cent to 4.3 million units from the 61,570 units posted a day earlier, the value of securities increased by 10,301.7 per cent to N947.2 million from N3.3 million, and the number of deals went up by 146.7 per cent to 37 deals from the 15 deals achieved in the previous trading session.
At the close of business, Infrastructure Credit Guarantee Company (InfraCredit) Plc was the most traded stock by value on a year-to-date basis with the sale of 5.8 billion units for N16.4 billion, trailed by Okitipupa Plc with 170.4 million units worth N8.0 billion, and Air Liquide Plc with 507.5 million units valued at N4.2 billion.
InfraCredit Plc also finished the session as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Dipo Olowookere
The upward trend witnessed at the Nigerian Exchange (NGX) Limited in recent sessions continued on Thursday as it further improved by 0.10 per cent.
This was despite investor sentiment turning bearish after the local equity market ended with 23 price gainers and 28 price gainers, indicating a negative market breadth index.
UAC Nigeria gained 10.00 per cent to finish at N88.00, Morison Industries appreciated by 9.94 per cent to N3.54, Ecobank rose by 8.53 per cent to N36.90, and Coronation Insurance grew by 8.47 per cent to N2.56.
On the flip side, Ellah Lakes depreciated by 10.00 per cent to N13.14, Eunisell Nigeria also shed 10.00 per cent to finish at N72.90, Transcorp Hotels slipped by 9.95 per cent to N157.50, Omatek shrank by 9.23 per cent to N1.18, and Guinea Insurance dipped by 8.46 per cent to N1.19.
Yesterday, the All-Share Index (ASI) went up by 152.28 points to 145,476.15 points from 145,323.87 points and the market capitalisation chalked up N97 billion to finish at N92.726 trillion compared with the previous day’s N92.629 trillion.
Customs Street was bubbling with activities on Thursday, though the trading volume and value slightly went down, according to data.
A total of 1.9 billion stocks worth N19.2 billion exchanged hands in 23,369 deals during the session versus the N2.3 billion valued at N21.0 billion traded in 21,513 deals a day earlier.
This showed that the number of deals increased by 8.63 per cent, the volume of transactions depleted by 17.39 per cent, and the value of trades decreased by 8.57 per cent.
For another trading day, eTranzact led the activity chart with 1.6 billion units sold for N6.4 billion, Fidelity Bank traded 31.0 million units worth N589.3 million, GTCO exchanged 28.3 million units valued at N2.5 billion, Zenith Bank transacted 27.1 million units for N1.6 billion, and Ecobank traded 21.9 million units worth N744.3 million.
By Adedapo Adesanya
The Naira marginally depreciated against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, December 4 amid renewed forex pressure associated with December.
At the official market yesterday, the Nigerian currency lost 0.01 per cent or 18 Kobo against the Dollar to close at N1,447.83/$1 compared with the previous day’s N1,447.65/$1.
It was not a different scenario with the local currency in the same market segment against the Pound Sterling as it further shed N15.43 to sell for N1,930.97/£1 versus Wednesday’s closing price of N1,925.08/£1 and declined against the Euro by 20 Kobo to finish at N1,688.74/€1 compared with the preceding session’s N1,688.54/€1.
Similarly, the Nigerian Naira lost N5 against the greenback in the black market to quote at N1,465/$1 compared with the previous day’s value of N1,460/$1 but closed flat against the Dollar at the GTBank FX counter at N1,453/$1.
Fluctuations in trading range is expected to continue during the festive season as traders expect the Nigerian currency to be stable, supported by intervention s by to the Central Bank of Nigeria (CBN)in the face of steady dollar demand.
Support is also expected in coming weeks as seasonal activities, particularly the stylised “Detty December” festivities, will see inflows that will give the Naira a boost after it depreciated mildly last month, according to a new report.
“As the festive Detty December season intensifies, inbound travel, tourism spending, and diaspora inflows are expected to provide moderate support for FX liquidity,” analysts at the research unit of FMDA said in its latest monthly report for November.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450 next week, buoyed by improved FX interventions by the apex bank.
Meanwhile, the crypto market was down as the US Federal Reserve’s preferred inflation gauge, core PCE, likely rose in September—moving in the wrong direction. However, volatility indices show no signs of major turbulence.
If the actual figure matches estimates, it would mark 55 straight months of inflation above the US central bank’s 2 per cent target. The sticky inflation would strengthen the hawkish policymakers, who are in favour of slower rate cuts.
Ripple (XRP) depreciated by 4.5 per cent to $2.08, Solana (SOL) went down by 3.8 per cent to $138.11, Litecoin (LTC) shrank by 3.1 per cent to $83.23, Dogecoin (DOGE) slid by 2.5 per cent to $0.1463, Cardano (ADA) declined by 2.1 per cent to $0.4368, Bitcoin (BTC) fell by 0.9 per cent to $91,975.45, Binance Coin (BNB) crumbled by 0.9 per cent to $899.41, and Ethereum (ETH) dropped by 0.7 per cent to $3,156.44, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
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