Just passed out of Grad school?
Already started dreaming about BMW if not Lamborghini?
The best of the best time is right after graduation because that is the period you are most ambitious, energetic, adrenaline pumped and with big dreams.
And if you are the one matching these characteristic traits then Algorithmic trading as a career option is something which you should consider!
Let us explore more about it in greater detail:
What is Algorithmic trading?
Algorithmic trading in simple terms means automating the set of rules based on your trading decision like where to buy and sell by analyzing the Markets.
You can implement Algorithmic trading for any of your desired financial instrument such as Stocks, commodities, bonds or Forex.
How Algorithmic Trading is different from Manual trading?
In Manual trading, a trader decides which trade to make based on current market conditions and during this process, there could be possible mistakes humans are prone to commit. They are
- Fat Finger or human error
You don’t want the trade yet you mistakenly click on it.
A London based trader accidentally keyed $553 million into his computer during a trade, instead of $5 million. You come across many such incidents as we are humans and can’t eliminate mistake completely no matter how attentive and careful we are!
When it comes to money unless you belong to a family of the extremely high net worth person, you are emotionally attached to money! Yes, you hear that right and handling these emotions like greed, fear and hope are extremely difficult to eliminate, no matter how many books you read and watch videos on psychology of trading.
- Being Disciplined
Do you make your bed when you wake up in the early morning?
Do you plan your weekend and prioritize on what activities you need to focus on?
Do you carefully plan all the things you need to carry when going on a holiday trip?
If the answer to the above question is NO!
Then, Congratulations you and me both are not disciplined!
As the saying goes, “How do you do anything, is how you do everything”?
No wonder all these will reflect in your trading decisions and you will mess up one time or the other.
Algorithmic trading is certainly one way to avoid such blunders.
Pros of Algorithmic trading
- A Lucrative career path which is in rising demand since most companies understand the inherent risk involved in trading.
- Eliminating emotions completely.
- Follow your trading plan religiously as you already instruct the computer the set of rules.
Cons of Algorithmic Trading
- You will be unable to control your losses if the computer program executes in a way that you don’t want it to. Tweaking the code at that very instant is a challenging task. And hence it is extremely crucial for backtesting your strategy on historical data before going Live.
- It is a complex subject to master as you need to have knowledge of both trading and programming. It could only get easy unless you have a who can train you the right way of excelling and give you the wings to get into your desired position
How to get into Algorithmic Trading as a Career Option?
- Either go to an elite business school where most of the Algo Trading firms go in hunt for the top talent (OR).
- Learn the skill there are many institutes that are offering their course.
- Once you learn the skill, backtest your strategy on the historical data and have a track record of your performance.
- Network on LinkedIn and job portals there is a lot of demand for the right candidate who has a combination of knowledge of Financial Markets and Programming!
Algorithmic trading as a career option does guarantee you the financial stability that you deserve but it is not a cake walk due to the complexity involved.
Once you master the skill. Sit back and watch your machine make money for you!