subject: Algorithmic Trading Is Better Than Manual Trading [print this page] As the name suggests, algorithmic trading is a way of placing order online using complex computer algorithms. Basically, the complex algorithms are used to control the trading of stocks, shares or any other investment product in the algorithmic trading. These algorithms are very intelligent and capture the market trend very efficiently. As everything is computerized and totally away from human intervention, it is considered to be safer and more profitable. Speed plays a vital role in the success of automated trading and hence, this automated trading is much more reliable. If used with an effective marketing strategy, algorithmic trading can help you achieve indefinite profit. Thus, more and more people are using this trading technique now and it has completely replaced the manual trading.
Manual trading entails lot of human involvement and hence, highly prone to errors. Also, human are very emotional and many times, they take certain decision which are not correct. The advent of algorithmic trading system has completely changed the whole scenario of trading. Unlike human, the machine predicts the market trends only on the basis of statistics. In the beginning, the trades were reduced in size and later on, into smaller trading unit. Due to the computerized programs, trading size also reduced to milliseconds. Thus, trading was made much faster as well as efficient.
Being completely dependent on computers, algorithmic trading can be done by anyone who is willing to trade in the financial market. Furthermore, its an excellent option for large investors as large investment simply means large profits in this case. Apart from large investors, it is also used by institutional traders, small time banks as well as pension fund. All these traders take investment from their client and collect it for starting fund. After this, they divide the fund into small market investments using algorithmic trading. The investments into small markets greatly reduce the loss to nearly zero and hence provide a positive cash flow. Due to this reason, most of the people are investing in mutual funds.
Earlier, there were various marketing strategies that were put forward. Usually, marketing experts as well as economists used to place them in a way to get the most out of it. In the beginning, many people were apprehensive about using algorithmic trading but later on, they realized that it is much better than the manual trading. It also helped to better preexisting investment strategies as trades got even better.
While choosing the trading platform, it is very important to consider its reliability as well as functionality. So, use algorithmic trading system and higher the chance of making profits.
by: Sheila Parker
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