Building Automated Trading Strategies October 2018 | Page 13

CHAPTER-2: THE ALGORITHMIC APPROACH
Automated trading refers to the process of automating manual trades. This
process usually focuses on the prediction of asset price movement based on a
recognizable price trend and its historical time. Other methodologies may
include macroeconomic indicators, news releases, and many other events.
On the other hand, Algorithmic Trading refers mainly to the research and
analysis of market conditions and trading data in order to develop efficient
instructions and rules. It includes a wide variety of parameters such price,
time, and quantity. Actually, algorithmic trading uses common techniques of
classic financial mathematics (asset pricing theory, etc.).
The different approaches, at a glance:
• Algorithmic trading → automating research and analysis
• Automated trading → automating trade execution
Algorithmic Trading
Algorithmic trading or Algo trading or Black box trading means trading the
global financial markets using computer algorithms following a defined set of
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