Algorithmic trading

Algorithmic trading strategies

There are many algotrading strategies that are laid down by programmers in a trading robot. The main ones are:

• VWAP (Volume Weighted Average Price)

  Volume-weighted average price. Distributes order volumes evenly over a specified time interval at the price of the best bid or offer, but not exceeding the weighted average price for the specified period.

• Percentage of Volume

  Percentage of trading volume. Maintains a fixed percentage of market participation that is selected by the user. Trades frequent and small trades, responding well to volume spikes.

• TWAP (Time Weighted Average Price)

  Time-weighted average price. Executes orders by evenly dividing them into equal time intervals. The strategy does not take into account predicted changes in trading volume, which can have a negative impact on the market.

• Iceberg

  Iceberg. A posted order to sell or buy does not show the full size of the exchange order. Potential buyers see only a part of the order, and only after its execution the next part is published. And so on until it is fully executed.

• Arbitration

  The Forex Robot employs an arbitrage strategy by purchasing a less expensive asset on one exchange and promptly selling it at a higher price on a different platform, anticipating that the price discrepancy will balance out. The arbitrage strategy is almost risk-free, as the transactions are short-term, and the profitability is formed due to the high frequency of operations.

• Trend-tracking strategy

  The tasks of the strategy are: early detection of the emerging trend through various indicators of technical analysis, issuing signals to trade in the direction of the trend and issuing signals to close a position when there are signs of the end of the trend.

• Scalping

  The scalping strategy uses high-frequency robots to open and close positions within split seconds to make small profits. This strategy is more commonly used in futures markets where commissions are low.

• Pairs trading

  The strategy of short-term, intra-day speculation uses high-frequency robots to open and close positions quickly for small profits. Futures markets with low commissions are more likely to apply it.