Algorithmic Trading

By John Bates, Founder and Vice President of Apama Products, Progress Software.
In the algorithmic trading space, an “algorithm” describes a sequence of steps by which patterns in real-time market data can be recognized and responded to.

Anyone with a computer science background is familiar with the concept of algorithms for tasks such as the searching or sorting of data. However, what about algorithms that specify a sequence of steps to make money in the capital markets? That’s exactly what the latest excitement around “algorithmic trading” is all about.

In the algorithmic trading space, an “algorithm” describes a sequence of steps by which patterns in real-time market data can be recognized and responded to in order to detect trading opportunities and place and manage orders in the market. The term “algorithmic trading” has only become commonly used within the financial sector over the past few years—although trading algorithms have been around for longer. Historically, large investment banks have deployed armies of Ph.D.s to custom build trading algorithms. Now, an advanced technology approach called “Complex Event Processing” (CEP) is making it much quicker and easier to build, deploy, and manage trading algorithms, with fewer personnel necessary. Read the complete article.