subject: Algorithmic Trading Does It Really Work? [print this page] Ever since the algorithmic trading has stormed the financial market, a lot of people of were at first hesitant to use it because using it will eventually cause human control to be out of the equation when the actual investment is already made. There were many skeptics at first but eventually when people started seeing the results, more and more people began to believe that using algorithmic trading can be used to their advantage. If you really want to know how effective algorithmic trading then below are proofs of its effectiveness.
It is used in any investment strategy
Even before the popular use of algorithmic trading, there have been many marketing strategies put forward and established. These marketing strategies have been place by experts in marketing and economists to ensure that when traders apply an investment, they get the most of it using these investment strategies. When algorithmic trading came to the picture, a lot of skeptics how would algorithmic trending relate with established investment strategies. Eventually, when more investors got to know algorithmic trading better, they realized that algorithmic trending can be used in any investment strategy. It even enhanced the use of the existing investment strategies because they traders got even better returns which they thought impossible when used with manual investment of data. Algorithmic trending basically enhanced and got much better results out from the investment strategies identified.
It has changed how market trading is done
Since manual trading is prone to errors because of the human involvement, a lot of strategies has been used to make trading efficient and fast. Fortunately, when algorithmic trending was introduced, it was the answer that traders have been looking for. Algorithmic trading basically changed and revolutionized the entire trading system. Before, trades has been decreased in size because of decimalization but later on, it was even reduced into much smaller trading unit. The use of computers has reduced trading sizes to seconds and even milliseconds, and has made actual trading faster and faster by introducing computers. Another indication that algorithmic trending has been effective is an increase in computer equipment by the trading industry. In the year 2005 alone, the trading industry has invested about $26.4 billion in the purchase of computer equipments alone.
It has been used by a large percentage of the market today
Because of its effectiveness, the number of people using it has increased dramatically. In the London Stock Exchange alone, 40% of the trades were inputted using algorithmic trending and is projected to increase in the next years, even up to 70%. Foreign exchange markets also show the same trend. All over the world, they estimate that 80% trading is done using algorithmic trading.
With this proofs presented, it really is safe to say that algorithmic trending is really an effective tool in the financial market. It is already been used by large part of the investment market, it has revolutionized the investment process and it can be used as in any investment strategy.
by: Julio Brick
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