Building Automated Trading Strategies October 2018 | Page 9

 In addition, some experts argue that auto-trading systems are
inefficient because they create trading signals based on backward-
looking indicators.
General Categories of Automated Trading
According to Mitra, di Bartolomeo, and Banerjee (2011), automated trading
can be divided into five (5) main categories:
(i) Algorithmic Executions
Opening and closing speculative positions based on mathematical
algorithms.
(ii) Statistical Arbitrage
Statistical arbitrage trading, which is based on the automation of the
investment decision process.
(iii) Crossing Transactions
A financial market participant seeks a counterparty to be the other side
of the trade, without exposing the existence of the order to the general
population of market participants.
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