How Algo Trading Helps Us to Be Smarter
Nowadays trading is a part of our daily routine, Some of us are trading for ourselves and others are doing it professionally.
In both cases, time and the number of trades based on our preferred market status are respectively high and low, compared with a case in which the trades were performed through a trading platform.
In such a case, the number of trades is higher in a shorter time consumed, while all these trades are executed according to our preferred market status.
In addition, there are supporting tools that make the handling of exchanges and funds also for non-experts and thus the access to the crypto market much more understandable and easier. It is an absolutely simple and efficient environment for trading crypto currencies and their financial transactions.
It also, can be used for trading on multiple exchanges, reporting on the assets in your portfolio, investment training, setting up private online discussion forums and any other function implemented via a publicly accessible plug-in infrastructure.
It also provides,
• Platform users receive reduced fees
• Agreements can be reached with banks to help increase the liquidity of crypto currency assets and ensure the availability of a FIAT gateway
• A simpler on boarding process on the exchanges
• Faster and more stable trading through premium API access
• Take advantage of privileged Exchange connections
• Achieve additional profit
There are some others who ease the trader’s path, known as market maker.
Market makers are typically large banks or financial institutions. They help to ensure there’s enough liquidity in the markets, meaning there’s enough volume of trading so trades can be done seamlessly.
Market makers role :
- Providing Liquidity
- ￼Matching Orders
- Stabilizing Spreads
For instance, In March 2014, Virtu Financial, a high-frequency trading firm, reported that during five years the firm as a whole was profitable on 1,277 out of 1,278 trading days, losing money just one day, demonstrating the possible benefit of trading thousands to millions of trades every trading day.
A third of all European Union and United States stock trades in 2006 were driven by automatic programs, or algorithms. As of 2009, studies suggested HFT firms accounted for 60–73% of all US equity trading volume, with that number falling to approximately 50% in 2012. In 2006, at the London Stock Exchange, over 40% of all orders were entered by algorithmic traders, with 60% predicted for 2007.
American markets and European markets generally have a higher proportion of algorithmic trades than other markets, and estimates for 2008 range as high as an 80% proportion in some markets.
Foreign exchange markets also have active algorithmic trading (about 25% of orders in 2006).
In conclusion it can be said that using market making institutions and algorithms instead of people who are trading in a relatively traditional way, can lead to a smarter and relatively larger investment which can increase the benefit of our investment.
If you are interested in market making, you can read on QuantVan market making archive.