Algorithmic trading is an automated process for financial markets. It currently dominates most operations in today’s digital world. And Andreas Polycarpou explains how Algo Trading plays essential role in trading financial markets and other sectors. Here are some basic facts from the renowned industry leader on how Algo Trading works.
Algo Trading – does it automate the entire trading process?
Andreas Polycarpou says, “Algo trading is a high-tech development that automates the trading process in financial markets through rapid and precise execution of orders. And these executions are always based on a predefined set of rules. Algo Trading uses intricate mathematical models and formulas to initiate high-speed, automated financial transactions. The goal of Algorithmic Trading is to help investors execute on specific financial strategies as quickly as possible to bring higher profits. It also eliminates all forms of human errors and reduces the dangers of trading based on emotions.”
Is Algo Trading complex?
Andreas Polycarpou says, “Algorithmic Trading used in production can be complex and optimized with low-latency systems. With the implementation of basic strategy on a single stock, it is effortless and straightforward to use simple technical indicators on trend-following strategies. To express it in a better light, the implementation of some qualitative elements, such as Financial News, news from the company makes Algo Trading less cumbersome and straightforward.”
Sentiment Analysis- what role does it play in the trading process?
In Andreas Polycarpou’s words “Sentiment Analysis, also known as Opinion Mining, refers to the use of Neuro-linguistic programming (NLP), text analysis and computational linguistics to decipher the emotional state of a topic/subject/writer. With Sentiment Analysis, it is easy to understand the undertones of a text, subject or topic. Just like Algo Trading, it helps to reveal the intensities of the different types of emotions, be it excitement or frustration. In a trading process, Sentiment Analysis will help distinguish between a Trump-like or Shakespearean subjective information and it goes beyond mere negative or positive sentiment.”