Increased Profits with these Algo Trading Strategies

Increased Profits with these Algo Trading Strategies

Capital Markets CIO Outlook | Monday, April 22, 2019

With institutional investors such as investment banks and hedge funds, algorithmic trading has become more popular, accounting for nearly half of the total exchange turnover. This is most often done using the software provided by a third-party provider’s brokerage company. As this trading requires setting up a separate server, it may be costly for retail investors. These automated business solutions make an individual stock selection based on personal risk profiles. And despite a year of the explosion as an asset class for bitcoin and other cryptocurrencies, there’s a long way to go for the algo trading market.

Credence Research, a market research consulting firm, reported that the market value of around $1.67 billion in 2017 for global algorithmic trading software, indicating investors’ growing faith in such software. Based on this data, the firm projected an increase in the market value to $26.1 billion by 2026. The stock market’s algorithmic trading leads the overall market value segment by far and is expected to continue its success over the coming years.

Until now, it has been a bit confined to a small set of hedge funds that have been trading for decades, largely through hiring experts from places such as IBM. In recent days, the technology has matured adequate to allow others to start dabbling in algo trading–whether using AI or not–although it has been less expensive. Brokerage firms offering algo trading platforms generally require large minimums for anyone wanting to play, and they don't have much tolerance for reserved traders wanting to tool around on their off-days. One company promises to change all that with a free trading platform–Alpaca.

Alpaca, a Silicon Valley-based Company, founded in 2015 offers free stock trading API commission for user algorithms, automated investment needs, and bots. During that time, Alpaca was looking to build an algorithmic trading platform that would be able to conduct real-time technical trading. The technology developed by Alpaca is already in use at Asian institutions, including Mitsubishi UFJ Financial Group (MUFG), Japan’s largest financial institution. Technical trading is all about visual patterns that behave predictably. Downloading one of the many free AI frameworks makes it easier for all traders to make the best use of AI and develop their own trading strategies.

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