How Algorithmic Trading is the Best Investment you may think it is

The FOReign EXchange market is one of the biggest investments and trading markets in modern times, if not the biggest. Tackling the ever-changing value of international currencies and establishing the forex investments from one currency to the other has become a prime source of profit for many international financial institutions, where billions of pounds can be made every year from successful ventures into forex investments. The frequent success these institutions have found from forex investments owes a lot to the high frequency trading computer algorithms that have steadily grown alongside the knowledge and ability of the experts in this field.

 

Today, almost three-quarters of market trading of forex investments in the US was conducted using Algorithmic-Trading, with the number in the UK being nearly one-third. The benefits of working with these computer algorithms have been real. Whilst margins of profit may seem low compared to other markets, the rise of these high frequency trading programs have ensured that forex investments provide regular returns and greatly reduce the risks involved in investing in a highly volatile market.

 

Algorithmic-trading and High Frequency Trading have been the focus of much debate regarding their role in financial markets, but it has been shown to have a hugely positive effect, particularly by the Future of Computer Trading in Financial Markets project. The promotion of liquidity and the reduction of transaction costs have shown that trading through computer algorithms can, in fact, guarantee the stability of financial markets, and the few risks to special cases are easily addressed, leading to yet more increases in stability over the next ten years. Computer trading is clearly a positive investment tool and is only going to improve as time goes on.

 

For the average person, forex investments may still seem like a huge risk. Without the advantages of successful financial institutions and the high frequency trading systems they enjoy, the person has to navigate an ever-changing and potentially rewarding market on their own; blindly hoping that particular trades will pay off as the best investments and not turn against you when you are back is turned. Typically, it is too great a risk, but that need not be the case.

 

Algorithmic trading is no longer solely enjoyed by the financial sector. More and more groups are emerging, offering high frequency trading systems and computer algorithms for use by public investors, turning what was once a risky gamble into a more certain way of making money. These systems are proving to be more and more successful with each passing year, and are helping to provide people with a level playing field with the big institutions that are so regularly turning a profit.

 

Today, as an individual, you have just as great a chance of taking a slice of the forex investments pie as the biggest banks and market traders. Wider access to these High Frequency Trading programs is set to drastically reduce the losses incurred by forex investments in the near future. This positive progress will make the market infinitely less risky and potentially the best investment for even the individual trader !



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Algorithmic and High-Frequency Trading (Mathematics, Finance and Risk)


By (author): Álvaro Cartea, Sebastian Jaimungal, José Penalva
The design of trading algorithms requires sophisticated mathematical models backed up by reliable data. In this textbook, the authors develop models for algorithmic trading in contexts such as executing large orders, market making, targeting VWAP and other schedules, trading pairs or collection of assets, and executing in dark pools. These models are grounded on how the exchanges work, whether the algorithm is trading with better informed traders (adverse selection), and the type of information available to market participants at both ultra-high and low frequency. Algorithmic and High-Frequency Trading is the first book that combines sophisticated mathematical modelling, empirical facts and financial economics, taking the reader from basic ideas to cutting-edge research and practice. If you need to understand how modern electronic markets operate, what information provides a trading edge, and how other market participants may affect the profitability of the algorithms, then this is the book for you.
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