I’ve been trading futures for over 15 years now and in that time I’ve seen many changes in the markets. None is more prevalent and radical than algorithmic trading. When I began my trading career it was humans competing against humans in speed and intellect, both in the pit and electronically. You could get an edge through buying the bid or selling the offer. You could see size and flow influence price. You could pick off orders when news and economic data moved the markets. Traders had time to think and react. Sadly that is not the case anymore. It was estimated this year that around 75% of trading volume in the US is executed algorithmically.
The Evolution of Algorithmic Trading
The strategy I utilized in the first 5 years of my career was day trading based on speed and technical indicators. The profitability of the company dropped drastically once the machines began to take over. You could literally see the change in the market; you could see them turn on and off and see them quoting and executing faster than humanly possible. The company ended up closing because they didn’t want to invest in the race for speed and technology and the traders couldn’t compete without it. I had to make major changes in the way I traded if I wanted to survive. The learning curve for this change was long and full of expensive lessons.
Algorithmic Trading and Flawless Execution
I had to learn to stop trading all the time and realize I just can’t react as quickly as a computer. I had to deal with giving up the edge getting in and out of trades. I had to realize that what I see in the market isn’t always what’s really there. I adjusted risk parameters and how I utilized technical strategies. Eventually I developed into a longer term position trader. I studied and incorporated a fundamental approach in combination with technical strategies. I’ve successfully transformed the way I trade but I know I’m leaving a lot on the table for the algo’s to profit from. Trading today has become human vs computer and humans will always lose to computers in the battle for speed and intellect. That’s why I’m excited to begin a journey to automate my trading. As they say, if you can’t beat them, join them.
That’s why I’m excited to begin a journey to automate my trading. As they say, if you can’t beat them, join them. The problem is I don’t know a thing about programming. You might wonder how I’m able to do this. I’m able to accomplish this feat through Professor Algo’s ADL Certification Program. I will learn to build professional trading algorithms without programming a line of code in just 4 short weeks. I am excited to see where the journey leads from there.
