What are all the Algorithmic trading strategies:
A set of directions or process for performing a particular job or purpose is called an algorithmic trading uses computer for swift traders. This kind of trading encompasses timing, price and quantity. It also ensures systematic trading and makes market liquid.
- Algorithm trading Strategies: The easiest and simplest strategies is trend following strategy it does not need predictive analysis but follows trend moving averages channel breakout and price level movements.
- Arbitrage trading: Arbitrage or risk free profit is based on price differential trading here a customer can buy a dual listed store at lower price and at the same time sell is at higher value in another market
- Mathematical model strategies: There are many mathematical model strategies that provide trading on a set of choices and its underlying strategies.
- Trading range strategies: Here the algorithm takes the decision of buying or selling the stocks whenever the price soars goes down, In this type of algorithm only partial orders are placed till the entire order is fulfilled, And these orders placed depending on the volumes traded and the participation ratio.
- Time Weight average Price (TWAP) : A large order is broken and released into the market as smaller chunks at regular intervals. It tries to maintain the average price from start to end.
Best price, less transaction cost, no chance for manual error are the advantages if algorithmic trading. It can also automatically monitor different market conditions. It requires a proper stock market analysis software, technical analysis software’s, price feeds, Forex rate feeds, order placing and back testing capabilities.
options trading strategies:
An option is defined as a “contract giving the buyers the right , but not the obligation to buy or sell an underlying asset a (stock or index) at a specific price on or before a certain date”. It is a derivative for it gets its value from an underlying asset. Stock options the index or equity . While options have expiry dates and there are no specified numbers . It is of two kinds namely call and put. The best way to trade options is to understand the following trading strategies.
Long call options:
When the clients feels bullish and anticipate the price of particular share to rise ,long call options is used
Long put options:
This is a strategy opposite to long call options for an investor uses it when he feels bearish and experts the price of share uses it when he feels bearish and experts the price of a share to rise.
Short put options:
If the trader opines that the stock is not volatile and tries to get the option premium on two contracts, he follow this strategy.
Long straddle:
A customer uses this strategy, when the stock is very volatile but the rise and fall cannot be predicted. Binary options trading means the risk a trader places on whether or not a particular asset will rise in its value at a certain time.
These strategy used either in combination or separately help in getting the most expected profit. But the customer has to be choosy and based tools like options calculation he can select on what to invest and be ready to quit when things are in favorable position.
Candle stick charts:
The opening and closing prices of the financial instrument if the date of Indian share market.
- For a particular period of time are represented by the Japanese candlestick charts
- Prices are indicated by this chart and each candle stick has a wick . The top of the wick stands for the highest traded while the bottom wick is for the highest traded price while the bottom wick is for the lowest traded price.
- The opening and closing trades are represented by in between rectangular region.
- Selling pressure where the open is more than the close is indicated by the filled candlesticks.
- Hollow candlesticks stand for buying pressure where the open is less than the close.
- Long filled candlesticks mean the price increased considerably from open to close and thus result in buying pressure.
- When price drops considerably from open to close and thus lead to strong selling pressure, it is indicated by long hollow candlesticks.
- In online trading, various colors’ used in the chart stand for higher closing and lower closing.
- Day traders regard this chart as a more effective tool for transaction for they show short time price moments.
- Candlestick patterns: For predicting price fluctuation candlestick charts are built. Traders use this method in their intraday trading strategies . The popular candlestick patterns are:
- The reversal Pattern: Here three- line strike craves out 3 filled candle inside a downtrend followed by a bar that opens lower than the 3rd bar but closes above the high of the first bar.
- To indicate that the decline will continue further, after a prominent top in the up trend , two black gapping patterns appear with a gap showing lower lows.
- To show the decline will continue to further lows, three filled bars that close near intra bar lows known as the three black rows.
- The evening that predicts the decline will continue uses the pattern of a tall hollow bar, followed by a higher small filled bar and ending with a filled bar.
