What is day trading?
Day trading is the practice of buying and selling a security on the same trading day. It can take place in any market, but it is most common in the forex and stock markets. Most day traders are financially secure and highly educated. They use high leverage and short-term trading strategies to profit from small price fluctuations in highly liquid stocks or currencies.
Issues and risks
Day trading is not for everyone, and it is inherently risky. Furthermore, it necessitates a thorough understanding of how markets operate as well as various strategies for profiting in the short term. Though success stories of day traders who struck it rich frequently garner a lot of media attention, keep in mind that this is not the case for the vast majority of day traders: many will fail, while others will barely make it. Furthermore, don’t underestimate the importance of luck and timing—while skill is important, a bad streak of luck can sink even the most experienced boat.
The global financial markets have witnessed a significant paradigm shift in how trading is conducted. Algorithmic Trading (abbreviated Algo Trading), also known as Program Trading or Automated Trading, implies that trading is carried out by computer programs. At the moment, the vast majority of trades in some markets are algorithmic.
These algorithms rely on quantitative finance techniques to develop trading strategies, identify profitable trade opportunities, generate trade signals, generate trades, and execute trade orders. Technologies are extensively used at each stage.
Algorithmic trading, which employs quantitative methods, is now a lucrative career. A breed of traders known as the “Algo-Traders” or “Quant-Traders” has emerged who have certain skill-sets that are much sought after in the industry.
Why do you prefer algorithmic trading over day trading?
- Trades are correctly timed and executed instantly to avoid significant price changes.
- Reduced transaction costs.
- Lowers the possibility of human error when placing trades.
- To determine whether an algorithmic trading strategy is viable, it can be backtested using historical and real-time data.
- Reduced the likelihood of human traders making errors due to emotional and psychological factors.
- There are many good books written by well-known authors on various algorithmic trading topics that can help you learn algorithmic trading.
Here are some books that may be of assistance:
- Algorithmic Trading Book – A Rough and Ready Guide – FREE
- To hone your knowledge of derivatives, John C. Hull’s book “Options, Futures, and Derivatives” is recommended for beginners.
- Dr. Ernest Chan’s book “Algorithmic Trading: Winning Strategies and Their Rationale” can be used to learn about algorithmic trading.
Algorithmic Trading Resources for Free
In addition to the books mentioned above, beginners can learn algorithmic trading by using the free resources listed below.
- Blogs – Read and follow various algorithmic trading blogs.
- Videos – Watch online videos on Youtube to learn.
- Podcasts—Listen to podcasts that have been traded.
- Webinars—Attend online webinars (list of IIQF-hosted webinars).
- Free courses—Sign up for free courses on online learning platforms like Coursera, Udemy, Udacity, edX, and Open Intro.
- Workshops: Participate in workshops.
- Websites—Learn from some of the most informative Quant websites.
Although these free resources are a good place to start learning algorithmic trading, it is important to note that some of them have flaws.
- Algorithmic trading books do not provide you with hands-on trading experience.
- Free courses to learn algorithmic trading on online portals can be subject-specific and may provide very limited knowledge to serious learners.
- Another important consideration is the lack of interaction with experienced market practitioners when you choose some of these free courses.
6 Months Weekend Program
The PGPAT course, or Post Graduate Program in Algorithmic Trading Online, conducted by IIQF, is taught by highly qualified and experienced market practitioners and is a job-oriented master in Algorithm Trading online course that aims to produce industry-ready Algo-Traders, who can join the trading desks of various financial institutions or set up their own independent algorithmic prop trading desks. We do offer a Certificate Program in Algorithmic Trading (CPAT) online with world-class faculties. Enroll now.