Different traders approach the Stock Market to get good
profits and amass good wealth. With the advent of the technology new way are
coming for stock trading. The automated trading or algorithmic trading is one
among them. In the automated trading or algorithmic trading the strategy for
trading is programmed with the help of a computer and then the buy and sell
calls are placed automatically with the help of computer when the rules of the
strategy are met. The algorithmic trading helps the trader to keep the greed
and emotions away from their trade and to respond very fast once the rules of
the buy and sell trades are met.
The strategies ranging from very simple to complex can be
programmed with the help of automated trading. The strategies involving
technical indicators can be easily programmed in case of Automated Trading. For
example there is a strategy involving moving averages. Here we are having two
moving averages of different periods, one with a smaller period and the other
with a bigger period. The trading signals or the buy and sell calls can be
initiated at the crossover of two moving averages. A buy call will be initiated
when the smaller moving average cross over the larger one and the sell call
will be initiated when the larger one crosses the smaller one. Thus this
strategy can be programmed based on the following rules:
1) Calculate
the moving average of two different periods.
2) Buy if
smaller one crosses the bigger one.
3) Sell when
the bigger on crosses the smaller one.
The automated trading is a new way of trading in the stock
market. There is no need of stock market tips from the advisory firms and it
works on the rules of the strategy a particular trader is following.
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