Explaining Algorithm Trading: A Comprehensive Guide

Trading has been one of the oldest departments that have developed into a systematic institution.

Trading has been one of the oldest departments that have developed into a systematic institution.

Trading has been one of the oldest departments that have developed into a systematic institution. Countries,companies, and almost every institution believe in the art of trading. Although financial systems evolved decisively with different tools and techniques,trading is still regarded as the 'ideology' that functions an economy.

Times have changed, and institutions have evolved. New technology has been accepted and adopted at a large scale. The world finances all major transactions through paper currency; however, the dynamics always tend to change. Cryptocurrency has been one of the finest inclusions in the financial institutions that have led the charge to what we shall say, the most diverse and systematic change in financial management ever.

Amidst the adoption of cryptocurrencies and digital trading currency on different scales, multiple tools are believed to be made part of this contemporary system. Many methods are believed to be included in digital trading, which also includes‘ algorithmic trading.’ Also called algo trading is one of the most decorated and efficient methods of carrying out trades through computers. Also referred to as 'automated trading,' this version calls up decisions through computers over what and what not to buy or sell within the financial markets.

Cryptocurrencies have turned out to present the most consensual and convenient digital financial systems of this era. Quants (also named as quantitative traders) have been looking towards effective trading methods within this trading sector and gaining the best out of it. The basic ideology behind the implementation of such strategic trading is to gain the best out of all trades recorded across the system. This calls up for the use of automated and pre-programmed trading instructions, which are, however, designed by humans themselves.

Quantitative traders have been looking for the edge in trading techniques. Where computers decide when to buy and sell, these decisions are carried out with appropriate trading rules or a well defined trading setup. To develop such rules, one of the basic needs of any quantitative trader is a platform that features an extensive set of readings and recordings that influence the decisions.

These readings and recordings help traders implement complex formulas with a combination of different mathematical models and real-time analysis, which leads to decisive actions that would be taken across any cryptocurrency exchange. Algorithm Trading is surely the future trend of efficient trading while presenting various use cases to the traders.

Quants have been a part of the crypto space, where they have had a mixed opinion over the market's sentiments.With the market volatility that has been witnessed in the crypto market over the years, there are a lot of mishaps reported among the quants, to be specific. Thus, they have been looking for efficient techniques guiding profitable trades. Though algorithmic trading has been part of the traditional financial systems since the 1980s, the use of this technique took some time to be included in the crypto space. One major difference brought up across the conundrum of this version of trading is the adoption of this technique among all quants, ranging from large trading firms to small, decorated traders.

The strategies that are designed across a compelling set of readings will then be part of a 24/7 evaluative understanding of computers across the crypto market. This, as quantitative traders believe, is a very effective resolution to human trading, which by far has a lot of flaws and issues pertaining to a lot of factors, such as emotionand real-time actions. Algorithmic trading has thus become the key to emotionless trading among quants and crypto traders. To be clear, there is no emotion, that is by far one the best positive aspects of algo trading instead of the human behaviour of greed and fear. Gordon Gecko is not calling here.

If we look deep into algorithmic trading, two major sectors are believed to constitute the whole process of this version of trading:

1)     Market Inefficiency Discovery: Traders find something that can be exploited across the market. In the case of the crypto world, market inefficiencies can be observed across crypto coins and tokens that are potential projects. Any discrepancy within their finances or operations can disrupt the market if evaluated correctly.

2)     Market Inefficiency Exploitation:The strategy needs to be designed to take advantage of the market inefficiency,which would be followed by buying and selling across the exchange.

Algorithm trading can be very effective in a lot of ways profitably. However, where the speed and agility of order execution is the main feature of this method of trading, it may become aliability under certain circumstances. Quants are advised to be protective withtheir decisions, which would be inflicted upon the decisions taken by the this auto decision-making system.

Pembe.io comes with a perfect platform for quantitative traders, where we provide a direct inclusion into algorithm trading with its effective tool. Our platform has come up with all the necessary toolkit required to help and teach quants for carrying out effective trading. We provide quants with the necessary resources that would be helpful for them in setting up clear trading strategies, with effective backtesting, carrying out proper paper trading, and finally going live into an exchange withthe developed trading strategy.

The presence of an effective algorithm trading platform has been a major lacking. Many quants have been finding it difficult to implement this trading strategy on to this volatile market. With Pembe.io, many things can be performed across the platform, which would help quants set up a very effective trading strategy for managing crypto assets. It is has been considered a myth to carry out risk-free trading across the cryptocurrency market. We have observed that the platform has developed to the extent of providing services within a controlled risk environment.

To effectively perform algorithm trading across cryptocurrency exchanges, we provide a very simple and prolific system of implementing trading strategies across exchanges. After setting up across the platform, quants can consider adding different API keys across their favorite exchanges and connect prospectively with the system. With the help of our analysis tool, quants can measure their success rate across the crypto world with the implemented trading strategy.

This version of trading can be very effective if followed appropriately. Quants need to realize the issues at hand and focus on the platform that provides them with the best services.

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Algorithmic Trading SaaS Solution

We have built the value chain for algorithmic trading. Write in native python code in our live-editor. Use our integrated historical price data in OHLCV for a bunch of cryptocurrencies. We store over 10years of crypto data for you. Backtest your strategy if it runs profitable or not, generate with one click a performance sheet with over 200+ KPIs, paper trade and live trading on 3 crypto exchanges.