Algorithms and Financial Technology

Financial Algorithms
WHAT IS ALGORITHM

The word algorithm refers to the systematic procedures associated with arithmetic and
computing. The word may be derived from the last name of Mohammed Bin Musa al-
Khawarizmi.

Algorithm is any well-defined computational procedures that takes some value, or set of
values, as input and produces some value or set of values, as output. An algorithm is thus a
sequence of computational steps that transform the input into the output.

Algorithm can be viewed as a tool for solving a well-specified computational problem. The
statement of the problem specifies in general terms the desired input/output relationship. The
algorithm describes a specific computational procedure for achieving that input/ output
relationship.

FINANCIAL ALGORITHMS
Financial technology is concerned with the representation and processing of financial
algorithms. Financial algorithms are systematic procedures used to financial communication
protocols, compliance rules for regulatory authorities, clearing and settlement operations,
coded representations of financial information, authentication schemes, and also decision
rules for buying and selling. 
Notational Rules and Language

In order to avoid mistakes, algorithms must be specified in formal unambiguous language.

Algorithms are always written in a language suitable for current computing technology.

There are three different ways we can classify programming languages.

 Syntax

The syntax of a language refers to the rules used that specify how well-formed expressions,
functions, commands, and other language constructs appear in text. For
example, C and  Java have a similar syntax that all commands end with a semicolon.
While Excel has a totally different syntax; e.g., all worksheet functions must begin with an
equal sign.