3 Myths About Algorithmic Trading And The Corresponding Facts

by Algomaker India Algorithmic Trading companies in India

Maximum people have been the victim of fake news and rumours at some point in time. With the sudden popularity of social media sites, the myths just found a place to proliferate. No industry could escape the virus of rumours. It is essential to convert the myths about algorithmic trading and present the reality to the entire global population.

Myth #1: High-frequency trading and algo trading are the same.

If you search over the internet to get information about algo trading, you may develop a concept that high-frequency and algo trading is all the same. It is because many websites and posts group them together as the “Algorithms.” But the terms are mutually exclusive.

• The process of algorithmic trading is all about the execution of orders using automated and pre-programmed trading instructions. The program will consider all the variables influencing the purchase or sell decision, including volume, price, and time.

• High-Frequency Trading is a particular type of algorithmic financial trading process. It exhibits definite features like high speed, high order-to-trade ratios, and high turnover rates that utilize the electronic trading tools and the high-frequency financial data.

Now that you can well understand that the two are totally different concepts, you can realize how the misconception can hamper decision-making.

Myth #2: algorithmic trading has technical challenges

If you are not much good at dealing with technical applications, you may give in to the myth that the algo trading process is technically challenging. In fact, millions believe in the misconception as it is easy to imagine that when a machine is doing such a critical job, you have to be a pro in technical aspects.

Although the experts never say that algo trading is non-technical or does not require any coding, you can be a successful algo trader even without any knowledge about the complex technical aspect. You don’t have to do the coding. You just need to know how the algorithmic trading works and how you can implement the features for better profit booking.

All you need to do is to ensure the following:

• Select the right platform from the numerous ones available around

• Preference for technical assistance

If you are ready to plunge into the exciting world of algo trading, why not start now?

Myth #3: Algo trading is not for Individual traders

And again, a big mistake. Individual traders cannot do High-Frequency Trading, but there is no such limitation for algo trading.

• People all across the globe can do algo trading.

• There is no need for any initial huge capital investment for the infrastructure and technology, as in the case of HFT.

• A little bit of coding knowledge and thorough experience of manual trading will aid in the procedure.

Get rid of doubts

There are many other doubts that you may have about algorithmic trading. But discuss and gather knowledge only from reliable sources and experts who have been in the profession for a long time.

Misconceptions often cloud your thought process and hinder financial growth by investing depending on the statistical data. The process has a prosperous future, and it is time to include you in the growth process.