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
Nigeria ranked as Africa’s leading destination for upstream oil and gas investment in 2024, new research from market intelligence firm, Wood Mackenzie, has shown, accounting for three out of four Final Investment Decisions (FIDs) announced by global oil and gas majors, totaling $13.5 billion.
The FIDs announced within the Nigerian market included Shell’s $122 million investment in the Iseni Gas Project, TotalEnergies’ $566 million commitment to the Ubeta Gas Project and Shell’s approval of the Bonga North Tranche 1 project valued at around $5 billion.
According to the Special Adviser to President Bola Tinubu on Energy, Ms Olu Verheijen, these investments reflected Nigeria’s ongoing efforts to unlock its hydrocarbon potential through investor-friendly policies and strategic global partnerships.
Last year, Nigeria introduced several initiatives to create a conducive environment for oil and gas investors, including new tax incentives aimed at attracting up to $10 billion in natural gas investments.
Nigeria, which is Africa’s largest oil producer, also offered tax relief for gas investors, reducing corporate income tax and extending capital allowance benefits – for deepwater gas projects.
Other policies include the Presidential Directive on Local Content Compliance Requirements 2024 to address the reduction in oil and gas investments caused by high operating costs compared to global markets.
Also, the Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines 2024 reduces the time spent to award contracts for oil and gas projects.
In addition to the directives, Nigeria also launched its 2024 oil and gas licensing round, offering 19 blocks for exploration, demonstrating its commitment to continued collaboration with local, regional and international partners.
Market analysts note that with this momentum, further FIDs are anticipated, including TotalEnergies’ expected $750 million commitment to the Ima Shallow Gas Project in 2025.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.22 per cent decline on Monday, January 20, with the market capitalisation shedding N2.35 billion to close at N1.073 trillion compared with the preceding session’s N1.075 trillion and the NASD Unlisted Security Index (NSI) going down by 6.79 points to wrap the session at 3,105.12 points compared with 3,111.91 points recorded in the previous session.
It was observed that the loss recorded on the first trading day of the week was triggered by UBN Property Plc, which crashed by 20 Kobo to trade at N2.00 per share versus last Friday’s N2.20 per share.
However, the share price of Industrial and General Insurance (IGI) Plc went up by 4 Kobo to 40 Kobo per unit from 36 Kobo per unit, it could not stop the bourse from going down at the close of transactions.
The activity chart showed that on Monday, the volume of securities traded by investors increased by 57.9 per cent to 767,610 units from the 486,215 units traded in the preceding session, while the value of shares traded yesterday slumped by 17.7 per cent to N2.3 million from the N2.8 million recorded in the preceding trading day, as the number of deals declined by 14.3 per cent to 12 deals from the 14 deals carried out in the previous trading day.
At the close of transactions, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value on a year-to-date basis with the sale of 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with a turnover of 9.1 million units valued at N44.0 million, and 11 Plc with the sale of 55,358 for N14.5 million.
Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume on a year-to-date basis with 25.3 million units sold for N5.9 million, Geo-Fluids Plc came next with 9.1 million units valued at N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units worth N162.9 million.
By Adedapo Adesanya
The value of the Naira weakened against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, January 20 amid FX pressures associated with this period.
Most people who came into the country for Christmas and New Year holidays are already going back and are in need of forex, putting pressure on the local currency.
Also, the poor performance of the domestic currency could be attributed to end to the 42-day access granted by the Central Bank of Nigeria (CBN) to Bureaux de Change (BDC) operators to buy forex at official price.
According to data from the FMDQ Securities Exchange, the Nigerian Naira lost 0.16 per cent or N2.47 on the greeback yesterday to sell at N1,550.05/$1, in contrast to last Friday’s rate of N1,547.58/$1.
Similarly, the Naira slumped against the Pound Sterling in the spot market on Monday by N23.39 to trade at N1,906.98/£1 versus N1,883.59/£1 and depreciated against the Euro by N23.14 to sell for N1,613.48/€1 compared with last Friday’s N1,590.34/€1.
However, in the parallel market, the Nigerian currency improved its value against the Dollar during the session by N5 to quote at N1,665/$1 compared with the previous session’s N1,670/$1.
As for the cryptocurrency market, it turned red yesterday as the US President, Mr Donald Trump, didn’t bring up the much-expected subject of crypto in his inauguration speech on Monday afternoon.
Mr Trump had promised a far more friendly crypto policy stance than the previous administration but in the long speech that announced his plans in the coming days, he didn’t make mention of Bitcoin or crypto.
Just over the weekend, the President ignited a speculative frenzy with the Friday evening launch of the Trump meme coin, which was shortly followed by a meme coin associated with his wife, Melania.
Dogecoin (DOGE) crumbled yesterday by 6.3 per cent to $0.3419, Solana (SOL) slumped by 4.7 per cent to $235.32, Cardano (ADA) fell by 3.6 per cent to $0.9777, and Litecoin (LTC) moderated by 1.9 per cent to $114.98.
Further, Ethereum (ETH) went down by 1.7 per cent to $3,241.36, Binance Coin (BNB) retreated by 1.4 per cent to $693.30, Ripple (XRP) depreciated by 1.2 per cent to $3.06, and Bitcoin (BTC) tumbled by 0.8 per cent to $101,746.99, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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