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  11. What is Algorithmic Trading?

WHAT IS ALGORITHMIC TRADING?

Like securities, energy products are also traded on a stock market. If these are automated with the help of computers and algorithms, then this can be considered "algorithmic trading". Here, the trading algorithm uses available data and a trading strategy to attempt to carry out purchase and sale transactions on the stock exchange. Since one of the advantages of algorithmic trading is the high speed of trade, the trading strategy needs to be verified and evaluated in advance. This can be done with the help of historic market data as part of a backtesting procedure.

Programme interfaces in the programming languages Java and R are available for the implementation of algorithms and trading strategies. The components thus developed by the client itself can be connected, activated, stopped and changed for the duration of the market operation, whereby the algorithm accesses the same interface via which the trader would otherwise place his orders manually.

 

Automated offers can thus be placed, changed or deleted in the market. Here, the algorithm always has an overview of the orders appearing in the market, as well as historic data, and can react to current events such as trades or to newly placed orders. The implementation of the algorithms in Java or R also facilities connection with any chosen external data sources.

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Sascha Gering, Director bei EXXETA

Sascha Gering

Director

+49 341 49635-242

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