3 Efficient Intraday Trading Strategies Used in Algorithmic Trading

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3 Efficient Intraday Trading Strategies Used in
Algorithmic Trading Intraday trading, as the name
suggests, refers to the process of buying and
selling financial instruments on the same
trading days which, in effect, means that all
the positions are closed before the market shuts
down for the day. By making use of the intraday
trading strategies, the investors or
speculators, as they are called, are able to
generate great profits. Algo trading strategies,
on the other hand, make the process incredibly
fast and much more result-oriented. Using algo
trading strategies in tandem with intraday
trading strategies, you can generate great
profits with minimal risk. Given below are some
of the most popularly used, foolproof intraday
trading strategies that are used to optimize the
algo trading process. Momentum and Trend Based
Strategy This is, perhaps, one of the simplest
and most straightforward ways of conducting
trades in the market. You are not required to
make any complex predictions. All you have to do
is to follow the market trends and your
algorithm will execute the trades accordingly.
The decision to conduct trades will be made
according to a number of technical indicators -
the moving averages, the price level movements,
channel breakouts, etc. Once a given set of
conditions is satisfied automated trading
happens. Arbitrage Strategy Arbitrage strategy
can come in handy if there is a difference in the
costs of the securities between two different
stock exchanges. The algorithm you are using will
collect the information from different exchanges
and quickly identify the two stock exchanges with
the greatest difference between the prices of
their securities. Itll then buy the securities
from the cheaper exchange and sell it to the
costlier one to generate maximum profit. This is
known as arbitrage profit. Although the profit
gained per trade isnt too high, but when you
consider the speed at which automated trading
works, you can make a substantial number of
trades to generate quite a lot of
profit. Weighted Average Price Strategy This is
one of the most popular as well as one of the
most effective trading strategies. In this
strategy, you are supposed to quick-execute the
order to the volume-weighted average price or
the time-weighted average price. It is to be
noted that the orders are executed in small
parts. The order is based at either
volume-weighted average price or the
time-weighted average price in specific opening
price in defined time slots. The benefit of using
algorithms is that they are able to release the
different orders in small portions, efficiently
and accurately within a matter of nanoseconds.
Needless to say, it is an impossible feat for
human traders.