Trading involves buying and selling stocks across various markets to make profits or get the best deal available on time. The process is hectic and requires that the trader pays attention to numerous factors, including when the markets open and close in different parts of the world to ensure they get in and out of trades on time. For this reason, traders are opting for algorithmic trading. USA has the largest trading market in the globe and statistics indicate that at least 60% of trades executed are from automated systems.
Choosing between the numerous software available from various developers is a challenge that most people in the business face when selecting the suitable one to use. Many factors influence the opportunities to choose between automated trading systems. Algorithmic trading avails a systematic methodology to trading that does not rely on the trader’s hunch. However, this is not to say that the automated trading systems present in the market are without errors. The trader should know the pros and cons of relying on an automatic solution before paying for any of the variations they come across. Below we discuss technical requirements that individuals should have to ensure that they can explore the different features in the systems to get the best results.
1. Computer programming know how
Algorithmic trading relies on programming to capture the necessary details about a specific trade and execute the parameters set by the trader. Although software developers have tried to come up with systems that are easy to use, traders with no computer programming knowledge are at a disadvantage. Setting parameters for execution requires the trader to have more information on trading from experience as well as know how on how computer systems work. Lack of either background could lead to a series of bad decisions when setting the parameters in the automated software system. The trader should seek guidance or hire an expert to help identify the features in the software and how best to use them for algorithmic trading. For companies, it is integral to have a technical team to handle programming issues and advice the other stuff members accordingly.
2. Access to bulk data
Not all software developers in the market can get bulk data in the trading world to make the predictions as accurate as possible. Before buying any automated trading system, it is prudent to check the developer and get to know how they operate firsthand. Currently, most traders are option for Artificial Intelligence systems that can access and analyze large chunks of unstructured data to deliver the desired results to use. However, data acquisition is still a major problem for developers offering automated trading systems to the consumers. Some developers can get the necessary information but the format is unreadable and useless to a trader who has no capacity to analyze the unstructured data and use the insights to make a well-versed decision regarding a trade.
3. Available infrastructure
Some of the systems that traders will find require certain hardware specifications to ensure that trades are executed at the opportune time in line with insights from data analysis. Testing the system is paramount before any money is spent in the stock markets. Having the correct software guarantees the functionality of the system to ensure that decisions are made and executed with the available time frame. Developers provide information concerning the hardware and internet connectivity among other factors to ensure the automated trading systems performs without a glitch that may cost the trader a lot of money. People looking to invest in multiple markets require a comprehensive system which may demand for costly infrastructure.
The technical requirements we discuss above are among the many that a trader has to bear in mind before buying or contracting developers to come up with an automated trading system. The complexity of rules on the algorithm relies on historical data to execute certain functions; this is another critical aspect that a trader cannot overlook. Access to the market feeds and data is another essential factor to bear in mind when reviewing the various systems present in the market. Research is vital in helping a company in the business or an individual trader understand the dynamics involved in developing and using any of the options they choose.
