Algorithmic trading is systematic investing in global stock and financial markets without any handicap of a human emotion. It involves using computer systems and softwares to follow a certain set of instructions that are known to earn fabulous returns for the investor. The rules are primarily based on the price, quantity and the time of a buy/ sell decision that is determined by historical data or a mathematical model. Algorithmic trading makes it possible for people to invest and book profits are extremely high speeds. Many investors fall prey to their emotions by being fearful and cautious or by being greedy and buying at a high price.
By monitoring the financial markets in an impassive way with a bird’s eye view, it becomes possible for one to get a better return on your investment. One of the biggest advantages of Algorithmic trading is that it has brought trading to the masses. Earlier, trading meant going to a trader and being constantly in touch with him to ensure that you get a good return. Without any background data, it is tough to make decisions regarding any investment. This kept most of the trading with High Frequency Traders (HFTs). With Algorithmic Trading even the common man can now trade and compete with the HFTs. Technology has simplified a lot of things that we do. Now with the ability to make informed investment decisions with the click of a button or with a tap on the screen, we are able to lead a much better and a financially secure life.