BeAlgo: How Modern Algorithmic Trading is Coping with Rapid & Unexpected Market Changes
(PRWEB) July 30, 2018 -- Many changes take place within the markets on a daily basis; some of which are rapid and unexpected. Yet, unlike in the past, many trading decisions are made by algorithms and not by human beings. How, in 2018, does the algo trading market cope with these routine changes? Regularly encountering various algorithmic trading issues, BeAlgo Broker experts explain how they do just that.
Take commodities, for example, as several factors influence them. A central influencing factor is the rate of the U.S. dollar, as all commodities’ rates are set according to the value of the dollar. If the supply and demand and of gold remain unchanged, but the value of the dollar decreases, then the price of an ounce of gold will rise, as a direct result of the devaluation of the currency. Other factors influencing the price of commodities include supply and demand, economic policies and sanctions. These are mainly felt concerning the crude oil industry, as much of it is sourced in the Middle East.
Another example is the field of indices, where increases and decreases are mainly related to the economy of a specific country. The value of the indices is directly compared to economic data and forecasts, based on speculation. Another influencing factor is the country’s interest rate – a lower interest rate will lead to more investments in the indices, but also in commodities and stocks, leading to a higher valuation.
BeAlgo experts indicate that different events can influence the cost of stocks, currency, and indices; from micro and macroeconomic perspectives. When talking about stock in a company from a micro-economic perspective, changes can be influenced by inter-organizational occurrences, reports, and forecasts. From a macroeconomic perspective, companies and their competitors must be compared for attractiveness, profitability, product cost-effectiveness, and simplicity, etc. It is essential to consider the economy of the country in which the stock is being traded, as well as market trends, as it is tough for shares to climb while other stocks in the market are plummeting.
Regarding currency– the currency’s value fluctuates according to the country’s economy, interest rates, its attractiveness to foreign investors, etc. And concerning indices, BeAlgo Broker indicates that several factors come into play. The index integrates a few stocks from a specific country. As such, if the shares rise, interest is low, and the security situation in that country is stable, the index will be expected to increase in value.
The advantage of algorithms in a dynamic market (as opposed to human tabulation)
People become attached to investments and trade with much emotion. They will love profitable stocks and will dislike stocks that have caused monetary loss (the same goes for commodities, indices, and currency). Algorithms, on the other hand, BeAlgo explains, operate via supercomputer. No emotions are involved, rather particular parameters and criteria are employed. Only these are used to determine whether to open or close deals. Aside from their enabling around the clock, focused work, algorithms’ ability to eliminate emotion from the stock market, is hugely significant.
Algorithms have become an ideal trading tool, but just as we cannot predict the future, algorithms cannot anticipate or estimate how an event might influence the index, commodity or stock. The advantage of algorithms, as opposed to people affected by news reports, is the lack of emotion. Algorithms will only act according to pre-set criteria. If a deal failed, the algorithm would not try and acquire what it lost, but instead will close the deal at a loss and will wait for the criteria to instruct it to open it again.
Algorithms are particularly advantageous when it comes to examining past data. The more that data is gathered for more extended periods of time, the higher security is afforded to algo users. “In any case, the dispersal of risks is an important element to consider. Most algorithms already do so, as a built-in function,” BeAlgo explains. “This is true in the case of making several investments in the same asset at different times, as well as in the case of spreading out funds among various financial assets.”
What is BeAlgo Broker’s role in all of this?
“Our customers are divided into two groups – companies who utilize company Nostro accounts for themselves and companies who use company Nostro accounts for private and institutional customers of their own. BeAlgo supplies these companies with the most innovative technology that enables their algorithms to trade more, faster and more precisely.
“As a technology supplier, we are responsible for the technology, but cannot influence or examine the algorithms of companies working with us,” BeAlgo experts explain. The technology supplied by the company is the most sophisticated solution in the global algo stock market industry, developed out of a desire to invest many resources, stand at the forefront of technological innovation and ensure customer satisfaction.
For more information, visit http://www.bealgo.com
BeAlgo, BeAlgo, https://www.bealgo.com/, +61 391112332, [email protected]
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