IMT GHAZIABAD

DR. SANDEEP SINGH

ALGO-TRADING
FINTECH

PARMAR
A COMPREHENSIVE EVALUATION

GROUP 8
TABLE OF
01 Background 03 Mission & Vision
CONTENTS
Presentations are tools Presentations are tools
that can be used as that can be used as
speeches, reports, speeches, reports,
and more. and more.

02 Our Services 04 Summary

Presentations are tools Presentations are tools

Our content today is that can be used as that can be used as
divided into four parts. speeches, reports, speeches, reports,
Each part will be described and more. and more.
with examples.
INTRODUCTION

ALGORITHMIC TRADING

Algorithmic trading, or automated These algorithms analyze vast

trading, has become a ubiquitous amounts of data, such as
force in financial markets, historical price movements,
revolutionizing the way trades are market trends, and economic
executed. It leverages the power indicators, to identify patterns and
of computer programs, make trading decisions.
programmed with specific sets of
instructions (algorithms), to
analyze market data, identify
trading opportunities, and execute
trades autonomously.
CORE
Speed and Efficiency
CHARACTERISTICS Unlike human traders susceptible to fatigue
and reaction times, algorithms can process
information and execute trades at lightning
speed, capitalizing on fleeting market
opportunities that might otherwise be missed.

Reduced Emotional Bias

Human emotions, such as fear and greed, can
cloud judgment and lead to irrational
ALGORITHMIC decisions. Algo trading removes this human
TRADING element, ensuring trades are executed based
on pre-defined rules and objective analysis,
potentially leading to more disciplined and
consistent trading behavior.
CORE
Back Testing
CHARACTERISTICS A Crucial Step: Before deploying algorithms in
live markets, they undergo rigorous testing
using historical data (backtesting).

Customization
Tailored Strategies: The beauty of algo
trading lies in its customizability. Algorithms
ALGORITHMIC can be tailored to specific trading strategies,
TRADING risk tolerances, and market conditions.
 DIVERSE
Trend Following
By identifying and capitalizing on established
APPLICATIONS
trends in the market, algo trading strategies
can aim to capture significant profits during
periods of sustained price movements.

Statistical Arbitrage
By exploiting short-lived price inefficiencies
across different markets or securities, algo
trading strategies can capitalize on these
temporary discrepancies to generate profits.

Market Making
Algorithmic programs act as market makers,
playing a crucial role in ensuring smooth
market functioning by continuously quoting
bid and ask prices, thereby providing
liquidity to the market.
THE RISE OF
ALGO TRADING Pattern Recognition
With the ability to analyze vast amounts of
historical market data, ML algorithms can
ALGORITHMIC TRADING identify complex patterns and relationships
that might be difficult, or even impossible, for
humans to detect. This can lead to the
discovery of new trading opportunities and
insights.

Algorithmic trading took a high rise in usage

and applications. Let’s see how the rise in the
concept of algorithmic trading happened.

Predictive Analytics
Leveraging the identified patterns, ML
algorithms can be trained to make predictions
about future market movements and potential
trading opportunities. This predictive power
can significantly enhance the decision-making
process for algorithmic traders.
STRATEGIES IN
ALGO TRADING High-Frequency
Trading (HFT)
High-frequency trading is a form of
algorithmic trading that uses
ALGORITHMIC TRADING complex algorithms to enter and
exit positions within fractions of a
second.
POV STRATEGY
The percentage of volume (POV)
DR. SANDEEP SINGH strategy is a simple algorithmic
trading approach that calculates
PARMAR the order quantity based on a
predefined percentage of the total
trading volume of an asset within a
chosen timeframe.
Momentum
Trading Strategy
One popular algorithmic trading
strategy is momentum trading,
which aims to capture trends in
stock prices.
Index fund
rebalancing
Index fund rebalancing, where the
fund adjusts its holdings to match
the underlying index, creates
temporary price fluctuations in the
affected stocks.
DEEP LEARNING IN
ALGO TRADING
ALGORITHMIC TRADING

Deep learning algorithms, a subset of machine learning,

have gained popularity due to their capability to extract
complex patterns from vast amounts of data.
Convolutional Neural Networks (CNN) and Recurrent
Neural Networks (RNN) are frequently employed in
algorithmic trading to process and analyze sequential
financial data, such as stock prices or trading volumes
OPTIMISTIC
FUTURE?
FOOLPROOF?
Is algorithmic trading foolproof?
Algo trading is not a magic
bullet. Despite the potential
benefits, algorithms are not
foolproof. They require
precision, ongoing
monitoring, and integration
with sound risk management
practices.
ALGORITHMIC TRADING
OVERFITTING? TRANSPARENT?
Is algorithmic trading overly fitting? Is algorithmic trading transparent?
Overfitting occurs when an As algo models become
algo model becomes too increasingly complex,
specific to the training data ensuring their explainability
and performs poorly on and transparency is crucial.
unseen data. Mitigating this This allows traders to
risk through proper model understand the rationale
selection, data validation, behind the model's
and regularization predictions and make
techniques is essential. informed decisions.
THE END