Algorithmic trading infrastructure emerged in the 1970s and “program trading” as it was known got it's foothold in the 1980s.
Previously reserved for institutional players in established markets such as equities and commodities, automated trading was dominated by larger institutions that invested a lot into developing strategies and infrastructure. According to JP Morgan research, share of manual trading on traditional exchanges such as NYSE is only 10% of their total turnover,the rest is done by algorithms. In recent years though, automated trading has more recently become more available to smaller businesses and individuals. Nowadays, and increasingly within the cryptocurrency space, exchanges are embracing algorithmic trading and offering API connections to their users.
This is amazing as it enables indivduals and those new to trading to leverage advanced technology to improve their trading results, and as the digital currency markets are highly volatile, anyone wishing to effectively exploit opportunities on these quick-moving markets can benefit from utilising the power of automation.
Algorithms can identify active cycles and emerging trends, and can limit your exposure in numerous ways. That being said, anyone in the trading space will tell you that markets change all the time, therefore the effectiveness of an individual algorithm can change quickly.
Algorithms are by definition created to fit a specific set of historical data. With this being the case, they likely won’t work as well as expected in live, dynamic market conditions.
For newer traders, those with less experience, or those with not enough time to dedicate to trading all day, automated trading strategies can prove an ideal choice. Algorithms can monitor numerous exchanges at the same time, 24 hours a day, to identify potential opportunities in the market. By extrapolating information from this they can then execute multiple trades on a large selection of trading pairs all at once if desired.
We will shortly be releasing an educational video series teaching YOU how to go from an absolute beginner to a knowledgeable algorithmic trader! Keep your eyes peeled and make sure you follow us on YouTube to see the latest educational videos released soon!