Algorithmic Trading: Humans vs Machines

In US Stock market, 85% of the trades are done by algorithms. And a strategy relying on algorithmic trading is extremely important for successful trading.

Investopia.com defines "Algorithmic trading as a process of using computers programmed to follow a defined set of instructions for placing a trade to generate profits at a speed and frequency that is impossible for a human trader." My investment firm has built multiple algorithms that invests in the stock market based on algorithms

I have been successfully trading stocks and options for many years and believe me making money by trading is not easy. It sucks the life out of you in the process of trading. Mostly because the traders while trading are competing against bots. Hedge funds and other fund investment organizations are using these bots to trade based on algorithms and patterns. It's hard to beat these smart algorithmic traders. Imagine being in the movie Terminator and trying to fight against Arnold Schwarzenegger. It would be extremely hard to beat such an Arnold Schwarzenegger trading bot.

Using my passion and experience in trading & technology, I have spent the past 6 months building such different algorithms and using it for trading. Algorithms that do investments based on market data, market emotion and stock behavior. It identifies what to buy? When to buy? And when to sell? It helps me in trading based on multiple data points and reducing the risk.

Human traders are emotional and would many times wait for a falling stock to climb back up or climbing stock to fall – thus eventually losing money most of the times. The algorithms help in taking away emotions and making the right decision majority of the time. Thus, if you are a trader rely on an algorithmic trading.

If you would like to know more about Saroj Investments’ algorithmic trading strategy, email me at pr_rohit@hotmail.com