Algorithm trading is a form of trading where computer is programmed to perform a certain trade automatically without much or no human attention at all. Computer is programmed to perform these trading business according to the market fluctuations of the products variables like volume of the product, time of trading and other variables. This trading system is automated in the computer software to reduce human errors. In human trading where human attention is neede, errors are rampant such that human loses concentration easily or be influenced by emotions to make wrong decisions yet Algorithm trading requires keen and accurate decisions to make the highest profit possible.
Algorithm trading can’t beat the average trader, considering the profit realized in a business trade, the amount of the profit realized is directly proportional to the capital applied on the same. The more the capital is risked the more the profit is realized when a business is done successfully as it was planned. When a computer is programmed by the trader and goes as it was planned, infact the average trader is at best position of being safe since incase the loss is realized the average trader loses the Little compared to when the capital put on the trade is higher.
Algorithm trading is more compliance to the average trader due to its speed of performance. When a computer is programmed and set to perform a certain trade, it performs it within a lapse of a second and the profit return is paid to the trader immediately. This means since the trading is time effective and very fast. The trader can perform very many business trading as possible each time programming the software of the computer appropriately. Taking into consideration the product volume and the time of trading. This means that when a loss is realized, the average trader incurs little loss.
Another reason why an Algorithm trading cannot beat the average trader is due to its conciseness, Compared to when the trade is done manually Algorithm is very accurate and less likely to make unnecessary errors which maybe human could have caused due to lack of paying attention or influence of emotions like impatient and frustrations. Algorithm benefits the average trader such that the business once programmed and done, profit is automatically realized without much strain or effort.
Algorithm trading again reduces cost in average trading businesses. Once the computer is programmed it searches market itself and eliminate the time wasted in manual trading looking for market. Computer searches where the market is high and performs the trading automatically without incurring the trader much cost and wastage of time.
In conclusion the Algorithm trading cannot beat the average trader, instead it saves the average trader in so many ways like time saving due to it speed of trading. It saves the average trader from losses made by manual trader who may end up being influenced by human errors. Again the average trader is likely to enjoy the accurateness of the Algorithm trading where the computer is programmed and identifies the best price at the market situation.