Book Image

Learn Algorithmic Trading

By : Sebastien Donadio, Sourav Ghosh
Book Image

Learn Algorithmic Trading

By: Sebastien Donadio, Sourav Ghosh

Overview of this book

It’s now harder than ever to get a significant edge over competitors in terms of speed and efficiency when it comes to algorithmic trading. Relying on sophisticated trading signals, predictive models and strategies can make all the difference. This book will guide you through these aspects, giving you insights into how modern electronic trading markets and participants operate. You’ll start with an introduction to algorithmic trading, along with setting up the environment required to perform the tasks in the book. You’ll explore the key components of an algorithmic trading business and aspects you’ll need to take into account before starting an automated trading project. Next, you’ll focus on designing, building and operating the components required for developing a practical and profitable algorithmic trading business. Later, you’ll learn how quantitative trading signals and strategies are developed, and also implement and analyze sophisticated trading strategies such as volatility strategies, economic release strategies, and statistical arbitrage. Finally, you’ll create a trading bot from scratch using the algorithms built in the previous sections. By the end of this book, you’ll be well-versed with electronic trading markets and have learned to implement, evaluate and safely operate algorithmic trading strategies in live markets.
Table of Contents (16 chapters)
Title Page

Differentiating between the types of risk and risk factors

Risks in algorithmic trading strategies can basically be of two things: risks that cause money loss and risks that cause illegal/forbidden behavior in markets that cause regulatory actions. Let's take a look at the risks involved before we look at what factors lead to increasing/decreasing these risks in the business of algorithmic trading.

Risk of trading losses

This is the most obvious and intuitive one—we want to trade to make money, but we always run through the risk of losing money against other market participants. Trading is a zero-sum game: some participants will make money, while some will lose money. The amount that's lost by the losing participants...