Algo Trading – The Cutting Edge Of Stock Trading

There really is a generation gap in the American stock market. What we see today was not even dreamed of 50 years ago. Decades ago, everything had to be done by hand and either in person or over the telephone. Everything was printed on paper. The financial news took longer to report, partly because “press time” meant the newspaper was physically being printed, not that a news story was uploaded and released. There were no computers, and there certainly was not an Internet.

Now, with the computerized stock trading, everything is different. The process has much been streamlined. It has even gotten to the point where complex computer equations are now processing information and making buy and sell orders. In the current Wall Street vernacular, this is called algo trading. The “algo” is shortening of “algorithm.” High frequency trading is a result of this innovation, as stocks can purchased and sold within split seconds.

Financial computer programs create numeric system models. These, in turn, can be fed a lot of data and information at a rapid pace. Algorithms can can take nuance and complexity into a account. By this, computers have now evolved beyond basic computation. Variables and probability can be accounted for. So, the algorithm can even be fed source material from no numerical sources, like newspapers, and still render complex transactional decisions.

Where this is headed is hard to tell. Greater complexity in computers may lead to more complicated financial investments and portfolios. Problems that used to take a team of financial experts can be solved much quicker. So, it may not be the same market as 50 years ago, but the market 50 years from now will look even more alien. One thing is still certain: money will be made, and money will be lost and somebody will make a profit.

Leave a Reply

Your email address will not be published. Required fields are marked *