Like every other section of society, the finance sector has too felt the impact of technological innovations. Artificial Intelligence and IoT have compelled financial trading floors to undergo a massive transition from the traditional trading practices to automated solutions.
Algo trading is white-hot in various financial markets. Automation of financial instruments’ trading has empowered traders to execute faster, increasing the overall trade volume percentage.
You might aim to pursue trading strategies that simultaneously trade equity, futures and forex using multiple bar types, exchanges and currencies. It is best to invest in an advanced algorithmic trading platform for executing all your ambitious trading schemes. With sophisticated solutions like Quant Terminal offering terabytes of market data and a highly-secure interface, you can explore these ways to boost your algo trading profits.
Select a Profitable Trading Idea
When you have a yielding concept for your algo, it is sure to fetch you greater profits. The best way to identify a lucrative idea is to target market inefficiencies, such as trading implied versus realized volatility.
You can start by reviewing academic papers for profitable trading opportunities. On the other hand, social media is yet another excellent resource to find the best ideas. Top retail traders share quality information, helping you understand various financial products better.
However, it is equally vital to verify the information presented and understand the economic reasons behind their success before proceeding with the ideas.
Start with Simple Strategies
A trading strategy involves several performance parameters, including max drawdown, number of transactions and associated returns. You can optimize them to earn higher profits.
But overfitting your strategy with more than two or three parameters will make it a challenge for you to understand the reason for its success.
Experts recommend starting with simple logic, coded in languages like C# and Python, on an algorithmic trading platform like Quant Terminal. You can then evaluate the logic performance, apply more parameters and filters, increase your returns by manifolds.
Make Right Use of Historical Data and Technology
With algo trading, you can harness the best of both worlds, a rich resource of historical facts related to various investments and future-ready technology.
With the facts from past investment experiences and technical expertise, you can identify the beneficial trading strategies. Moreover, you can capitalize on the latest technology, ensuring algo trading increases your profit-making opportunities.
Top solution providers leverage a clean and robust API of 600+ functions, offering easy connectivity to brokers via Connectivity SDK.
Make a Seamless Transition to Live Trading
Once you have backtested your strategy successfully, you would wish to pursue it in the live trading environment. Apart from a broker and exchange, you will need an advanced platform; ensure you use the same system for both backtesting and live trading.
Another vital aspect to consider is the need for high speed and low latency. Leading professionals offer solutions that run multiple low latency strategies, trading thousands of symbols simultaneously.
As an active trader, you would need a sound monitoring system to make profitable real-time decisions. Top agencies take care of this aspect with their advanced charting and drawing tools that you can use on multiple monitors during live trading sessions.
Focus on Performance Improvement
After you implement a successful strategy, you should find ways to make it more profitable. One way is to backtest it to look for common mistakes like the look-ahead bias. You can catch other misses like commissions and slippage.
Another proven way is to optimize a stable parameter range; try finding a flat slope where you can modify your selected parameters, ensuring consistent returns. Top professionals suggest using a data set for backtesting and optimization on an algo trading platform and another set for verification. Such tests help you do a better gap analysis, yielding higher returns.
Focus on Diversification
Leading solution experts enable you to assess multiple algorithmic trading strategies and view your joint performance results in a single integrated portfolio.
You can simultaneously optimize all your plans and trade in different financial markets, thus making you one step closer to diversification and associated profits.
Consult an Algorithmic Trading Platform Expert
When you are into algo trading, using the latest software can be beneficial; you can learn and master it in no time. And when you engage a reputable agency, you get access to their expert teams and tutorials, thus making your trading deals profitable.
As these platforms work with different trading styles, you can do large volumes of smart trading, which eventually amounts to higher returns.
Algo trading gives you immense opportunities to make excellent profits. If you wish to further boost your earnings, hire an institutional algorithmic trading solution provider such as Quant Terminal. You will have the entire algo trading cycle taken care of, ensuring you earn the highest returns at the expense of your least time and effort.