trading algorithm — how to write and deploy
Through our work on the OptionsHouse API client, we’ve somehow become known as trading algorithm experts. At least once a week, Branded Crate gets a phone call or email from someone who wants to automate trading activity. To even have a thought like this requires some level of sophistication. Even so, many potential clients aren’t aware of what it takes to create and manage a system like this. That’s our area of expertise, so if you’re considering trading automation, read on to learn more about how we do it.
The very heart of any trading algorithm is the actual algorithm, written using instructions a machine can understand (code). This is mainly what clients think about when they talk to us. The idea generally seems simple at first, but complexities emerge as you begin to consider automation. Without even thinking, clients “just know” to do things a certain way as they execute their trading strategies manually. Computers, on the other hand, don’t know anything.
Let’s say a client wants to buy N shares of some stock when the current price of that stock is lower than it was at the same time on the previous trading day and sell when the current stock price is higher than the same time on the previous trading day. This is probably a terrible strategy, but ignore that because it can still serve as an example of how and where complexities emerge.
Trading securities is a dangerous game. It can be difficult to develop a
strategy and stick to it in the face of an emotional marketplace that
stampedes from one extreme to the other. Sticking to a trading strategy
takes time, discipline and serious balls far beyond the capacity of most
human beings.