In today’s volatile and cost conscious trading environment, fund managers and traders who buy funds, securities have resorted to using computerized algorithms to gain new businesses and maintain relationships with existing clients

Algorithmic trading involves the use of a computerized trading system of rules that investors, fund managers and traders employ to make large dealings in securities while having a little or negligible impact on their prices.. Algorithmic trading uses complicated mathematical formulas to identify the ideal times to buy and sell securities in large batches.

 

Algorithmic trading or computer-directed trading cuts down transaction costs and allows fund managers to take control of their own trading processes. In their efforts to project themselves as a visionary and building their reputation as a thought leader, companies and brokers are using complex algorithms and programming to stay ahead of the competition.

To make an algorithm work U need

  • strong quantitative and data analysis skills,
  • good programming skills,
  • an ability to think and make decisions in terms of probabilities,
  • Prior knowledge about how the industry works
  • An eye to forecast future  and take action plans.

 

Analysts project that algorithmic trading will blossom in new markets such as Brazil and India. Some go so far as to predict the end of US and UK dominance in financial markets, projecting that algorithmic trading in the two countries will wane as regulatory arbitrage forces big banks and hedge funds to trade in more lightly regulated regimes.

Algorithmic trading has its own pros and cons but it is imperative that its application increase overtime so that we are less dependent on humans and we can have a better control over trading processes.

Financial firms globally are fine tuning their technology edge every day in universities and research centers to edge out low technology centric models still prevalent in other parts of the world. Identifying shortage of professionals who understand trading technologies, Institute of Electronic Trading Technology was set up in May of 2011 and has been working with top technology brains on Wall Street in USA to develop structured courses that can help develop talent to design, build, and manage complex global trading technology solutions.

“Our mission is to fill the gap between the rigorous but theoretical university courses and practical but non-rigorous courses offered by other institutes”, said Srinivasan Ramanan, Faculty Director of IETT. While multiple business schools offer a number of programs in investment banking, there is a complete lack of any program preparing engineering or investment banking professionals to learn the complexities of developing electronic trading technologies.


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