Changing times have always been coming with new things. Change is always good especially if the relevant stakeholders are involved in initiating it. There is always drastic change in ICT. This has not only been beneficial to those affected by it but also to those who are involved in it. The changes in technology have always enabled many people to participate in a number of activities. Those who have been benefiting so much are the ones involved in business activities. Gone are at times when an individual would physically visit the market for him to make a transaction. Most people now days engage in online trading in which they can let the computers do all the ordering and payment for the goods and services ordered. In essence this has helped very many people to expand their online virtual markets and reach out to the entire world.
One of the latest computerized business technologies that have been gaining popularity day after day is the algorithmic trading procedure. Even though it is thought to be associated with very big markets involved in bigger securities, algorithmic trading is one of the best programmed business procedures that have taken up almost half of the world wide business transactions. Algorithmic trading is a process in which machines (computers) are programmed to carry out business transactions basing on a number of predetermined factors. It is therefore easy to point out that Algorithmic trading is the easiest way in which small and big financial markets can conduct on-line business. When talking about Algorithmic trading, more emphasis is laid on the bigger markets like the stock exchange in which a large number of transactions are done everyday. It is easier for the stakeholders on the stock markets to sell and buy shares through their proxy computers.
One wonders how algorithmic trading is executable on the computers. Well, it is not easy to understand how it works, however it is always important to understand the strategies involved in Algorithmic trading. Basically, algorithmic trading is always implemented through two basic strategies either through Arbitrage or Scalping. Those who are new to Algorithmic trading might find this to be a very complex procedure; however it is quiet simple especially when one understands its applications.
Arbitrage is one of the easiest ways applicable as an algorithmic marketing strategy. It is important to understand that arbitration is a marketing strategy in which a certain trader buys goods and services from one market at a low price and resells them to a different market at a high price. This is the same thing that happens at the algorithmic market. The computers will determine the changes in prices of the shares and will take the opportunity to buy shares from a particular market at a lower price and resell them to a different market at a higher price. The machines work at very higher speed and they will always execute these instructions within a very short time.
Scalping is another algorithmic strategy closely related to arbitrage; however, for scalping to occur, there should be small services or goods that are sold on the market at a very high rate. It implies that there should be an established high turnover. In this case, the computers would determine this and float the shares to relevant parties at a high price in the hope that all of them would be sold.
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