Systematic Advantage #26: Any trading idea can be programmed … it just takes time, skill & money
One of the most beneficial aspects of systematic trading is its versatility and adaptability. Whether a new or complex trading idea is presented, it can be coded into an algorithm with time, skill, and resources. This offers a distinct advantage over manual trading, where implementing fresh strategies can take up plenty of time and can be much more prone to human error.
Before a successful trading algorithm can come to fruition, it needs to start with a well-thought-out trading concept or strategy that is defined precisely. These rules need to be translated into code that fits the specific algorithm. This means having experience in both financial analysis and computer programming, as complex mathematical modeling and sophisticated software tools are often needed during this process.
Testing and refining the algorithm is key to ensure it works as efficiently as possible with no weak points. This can take time and resources. However, it is essential to guarantee the system’s effectiveness. To evaluate performance under varied market conditions, backtesting against historical data is a widely used method that helps identify potential improvement areas.
Though coding a trading idea can be costly and involve countless hours, the rewards are worth it. An algorithm created with accurate coding will act quickly and accurately, respond in real-time to market changes, and operate continuously without the influence of emotions or fatigue. This could lead to higher profits and an effortless trading process in the long run.
