Algo Trading Has Been Here Since the ’80s, Here’s What It’s Learned

Trading algorithms have been around for several decades, with the use of algorithmic trading gaining significant traction in the financial industry since 1980. The development and adoption of trading algorithms have evolved over time, with computing power playing a critical role in their widespread use. In this video, I want to show you a bit of the timeline of algorithmic trading software and how it has progressed over the decades. Without further ado, let’s jump right in.

Welcome back! If you’re new to the channel, my name is Matt Jimenez. I’m an entrepreneur who has worked with the greatest minds in finance over the last several years, and I’m here to pour into you guys everything that they pour into me. If you’re watching this, you’re probably interested in algorithmic trading software, or you currently are running one and looking to optimize it or understand it a bit better. Today, I’m going to go over the timeline of these algorithmic trading software and how far they’ve progressed. Then, I’m going to get into the one that I’m using a bit.

In the 1980s, financial institutions and hedge funds began experimenting with automated trading strategies that relied on computer algorithms to execute trades based on preferred criteria. These early algorithmic trading software were primarily used to execute large orders effectively, minimizing their market impact. When you take a large position, depending on the market you’re looking at and its market cap, you may have some influence on the market. So, they used software to help them optimize putting in large orders without having much effect on price.

Later in the 1990s, marked a significant period of growth for algorithmic trading. With the rise of electronic trading platforms and the increasing complexity of financial markets, algorithmic trading became more sophisticated, incorporating mathematical equations, statistical analysis, and real-time data to make trading decisions—something no human nor one entity can do. But technology can do it. When you code with certain criteria of mathematical equations and stats, the software will continue to trigger based on those specific inputs, something that humans have always messed up.

By the early 2000s, algorithmic trading became mainstream practice for institutional investors, propelling the adoption of high-frequency trading strategies that aim to capitalize on small price discrepancies and market inefficiencies. High-frequency trading firms developed advanced algorithms and infrastructure to execute trades at rapid speeds, leveraging technology to gain a competitive edge against the market.

Today, trading algorithms are a prevalent practice in the financial industry, used by a wide range of market participants, including banks, hedge funds, proprietary trading firms, and institutional investors. They are getting more and more advanced. Trading algorithms are becoming so sophisticated that they’re using machine learning, artificial intelligence, and predictive analysis to optimize trade execution, risk management, and portfolio performance. The craziest part about all of this is the wide range of market participants that can use this software, which has now started a widespread retail usage. There are more and more algorithms popping up on the marketplace for retail investors like myself, and possibly you on the other side watching this, to use in your portfolio to gain an edge. This is definitely the future of investing and trading as we know it, and it’s only getting more sophisticated. As I stated, there’s machine learning and AI involved in it, and we all know how rapid things scale once you have machine learning and AI involved.

Where we are today, trading algorithms blow manual trading out of the water. It’s almost incomparable. In fact, most of the people who are actually profitable in trading today are using software; they’re not actually trading themselves. This is not financial advice, but if you want your portfolio to be relevant in the future, I’d suggest looking for an algorithm that can help you be relevant. Technology is slowly but quickly diminishing the use of people in markets; they are not efficient, while technology is extremely efficient.

Now, if you’re interested in how you could potentially license software like this, the one that I’m using is in a link down below. All you have to do is click that link, and you’ll be routed to speak with one of us on any questions that you have. So, if you’re interested, hit the link. If not, at least give me a like and/or subscribe. And like always, my friends, peace.
Please visit Algo Trading Has Been Here Since the ’80s, Here’s What It’s Learned to watch the full video on YouTube!

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