Want to earn without having to work on it as much?
Something that can help you make money passively without having to go through a 9 to 5 torture?
If your answer is yes, then you might want to stick around and learn a thing or two about algorithmic trading. This article focuses on strategies to make consistent passive income through algorithmic trading.
What is Algorithmic Trading?
Algorithmic trading is essentially a system that facilitates the perfect decision making for transactions in financial markets.
How is it done?
Well, in algorithmic trading, they use advanced mathematical models and quantitative analysis. And, what better way to get the job done than using computer programs? A computer programmer develops a rigid set of commands, essentially an algorithm, for placing a trade optimal for profit.
Factors that affect this sort of setup are price relative to quantity, timing, and potential currency conversion. There are clear-cut opportunities to profit for any trader since algorithmic trading cuts out or minimizes human intervention.
In that sense, it prioritizes systematic trading and over time helps to create more liquidity in the market.
You set the conditions for which the program runs then, you can sit back without having to keep checking live prices and graphs since technology has your back on this one. The algorithm does the work for you and that’s pretty much why when you’ve established a coded system yourself, you can just wander about and profit without having to do much work.
Also Read: Algorithmic Trading Courses for Beginners
How to Get Into Algorithmic Trading?
To start off, you need to be able to turn your strategy into a computer program. While that’s a bit of a challenge itself, the program also needs to have access to a trading account to be able to place orders for you. Now those two things alone can be a bit much for some so if you struggle to get that done, you could also consider reading up on strategies you can stick to and look into finding programmers to help establish the proper set-up. If you want to cut through the fuss of doing it manually, you can also consider an already-made trading software like Amibroker.
To have everything running smoothly, you’ll have to make sure your internet connectivity isn’t one to conk out because you’ll want your system running without any network hiccups. You’ll need to test the system a lot and it will come with painful mistakes and failures. Just make sure to identify the flaw, isolate the context of the circumstance and re-evaluate. Luckily enough you can try and mimic potential loopholes internally before you release it to a live market since that’s at a higher risk with harsher punishment.
Since you’ll be testing it out a lot, you might want to also be able to sustain data history to be able to re-assess how your model adapted to a certain trade and potentially readjust certain conditions in the program code.
But WAIT, There’s More…
There’s more than just a program that runs the show. You will also need an accurate source of market data. This is essentially the foundation where you build the entire system on. You’ll need the same live price feed to show fluctuating market prices so you can factor that into your model to establish the perfect soft spot to make a trade, buy or sell. The system needs to be tested and optimized on historical data. Once you’ve gotten the hang of the flow, you’ll be earning without doing much of the work.
Also Read: Algorithmic Trading 101
There Is A Catch!
As simple as it may seem, practicing algorithmic trading can get tougher to maintain and execute. As much as you can establish an algorithmic trading system, so can others and that’s a huge problem. You now have a huge amount of people to compete with so, even if it can be quick and easy to establish, it may, in the long run, end up being tougher than just sitting back and relaxing.
That’s not all you have to take into account. There are fluctuating prices that come at the tiniest fractions of a single second. That sort of shift is just logistically impossible for even a machine to manage. Things alter and change and the potential of a buy trade going through but a sell trade being ultimately delayed due to poor timing is a possibility even with a set computer program.
The Heart Of The Matter
It’s really interesting and thrilling to find a way to earn passive income through algorithmic trading. Even if the entire method relies heavily on well-built and systematized technology, it requires patience and hard work in the first place. People spend years to build and optimize algorithmic trading systems before they take it live. But when done right and well, the algorithmic trading can dwarf any nine to five salary job.
There are tons of resources over the Internet which can help you learn Algorithmic trading. However, the caveat is, none of them are structured and addresses your real needs. Traders end up spending years to make sense out of several discrete information sources. We, at Trading Tuitions Academy, have made learning simpler, faster and organized. Don’t worry even if you don’t have any prior programming experience, we have got it all covered.
The lessons are curated by folks who know the real pain point of students and were in the same shoes before. So, in a nutshell, we offer a shortcut to your desired outcome i.e. earning a consistent passive income through algorithmic trading.