For those who have watched The Wolf of Wall Street, the film’s idea of the stock market, trading desk, and finance, in general, can be dangerously distorted.
Most imagine a bunch of people operating at crazy intensity. That was true a few years ago. Fortunately, automation is putting an end to this toxic culture.
The “finance guys” are being replaced by “science nerds” who analyze risk and return in numbers and make well-informed decisions. But this is a process of learning, gaining experience, and evolving over time.
Investors often do not fully understand what happens when they click the “buy” or “sell” button on an asset in their online brokerage or investment bank account.
Retail (manual) trading is the main type of trading in the financial markets, but not the only one. Various algo trading software are gaining popularity, which make life easier for traders by performing most of the basic and routine tasks.
More importantly, these are not bots from unknown developers or automated trading signals from newcomers to the business. Private traders on Indian trading platforms have access to more advanced machine learning systems using transparent algorithms that have been developed by really strong market players.
Nowadays, beginners in the market choose the path of least resistance and use automated trading.
Algorithmic trading accounts for about 60% of all transactions in the financial markets. The main reason for the growing popularity of algorithms in trading is attempts to reduce the human factor in the market due to its high volatility. It is becoming available to a wide range of traders and investors.
Advantages of using Algorithmic Trading
More free time: you don’t have to sit in front of the quote screen all day! The computer will take care of the trading in shares and you will be free to do other things.
Better risk management: Since the computer takes care of the execution, there is no limit to how many markets or assets you can trade simultaneously.
Fewer mistakes: those who have been online stock trading for some time know that, often, what prevents the investor from succeeding, or at least is the source of most mistakes, is the investor himself. Trading is psychologically difficult and automating as much of the execution of orders as possible will ensure that errors are kept to a minimum.
Statistical advantage: algorithmic trading strategies can be tested before being used live. This ensures that you know your odds before you even start trading and can adjust your position size or execution speed according to market circumstances.
Algorithmic Trading: Technology Making Things Easier
In conclusion, there is no doubt that technology makes things much easier, and trading is no exception. Using computer programs to trade assets is not only fascinating, but it has also become the ideal approach in recent times.
Want to enjoy the benefits that Algorithmic Trading can offer you? Open your Demat account and trading account today with RKFS and have all the support you need to invest!