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What is Algorithmic Trading

12/08/2017

Fiza Raines

Research Lead

In a world in which algorithmic trading is taking over by a quick storm, effective strategies keep evolving.

A study dating back to 2016 pointed out that 80% of the global currency market transactions are of algorithmic nature, which is an astonishing amount if we quickly compare it with ten years prior: 2006 clocked in on about 25%. Is it a reason to get spooked: the fact that 80% of trades on FX markets are algorithmic? No. But it does mean that we’re in a transition period in which we cannot halt progress. Amid 2019 CMC Block Ventures Ltd started working on its very own trading algorithm to enter the world of algorithmic trading.

Ever since that decision, we’ve made swift progress. It is essential to trade in such a way that we generate consistent returns, and humans tend to be less consistent in terms of trading than an algorithmic approach. As we established above: Algo trading is the future, and CMC Block Ventures Ltd consistently focuses on moving forward.

Near the end of 2019, we had finished a variation of our first fully automated Algorithm. After an astonishing proof set of over 1800 changes to determine what works and what doesn’t. In seek of an answer to the question: is algo-trading profitable? With our limitations and to what extent can we, and therefore the client extract trading profits from the market.

Today we can proudly label ourselves, be it partly, as one of few algorithmic trading companies in the industry. It is focusing on creating and improving algorithms of all different types and ranging from a practical approach to market-making (late-stage) to high time frame and low-frequency algorithms, aggressive scalping, and intra-day trade algorithms. It’s all in the pipeline.

Algorithmic Trading is nothing more than creating trading rules and then translating them to the software

Before we continue talking about our Algorithm that has just been launched: what exactly is Algorithmic Trading? An easy answer to go over: Algorithmic Trading is nothing more than creating trading rules and then translating them to the software. In order to generate a trading system that can be used to trade fully independent. With an “on & off” switch and nothing more. Since when has this become a thing?

Algorithmic concepts date back tens of years. But the significant influx of Algorithms Trading actively has been in the last five years.
A market free of algorithms is unimaginable in all markets, including, Stocks, Commodities, and FOREX. So the question is not: “If” you should focus on trading algorithms, the problem is “when.”

Luckily CMC Block Ventures Ltd provides you with an easy to enter space of trading algorithms. Since the beginning of this month, our core trades are sent out by a sophisticated algorithm while we still retained the best of human traders.

On top of that: CMC Block Ventures has had the Trend Bot Algorithm and BreakOut Bot Algorithm running for over a year profitably now. Consistency is critical, as we discussed earlier, and an algorithm that has proven itself over many different months is a correct way of generating passive income through Algorithmic Trading.

We haven’t even talked about the best part: The CMC Block Ventures ecosystem allows you to “set and forget”: We do all the work, build the algorithms, manage them, improve them, make sure the algorithms can be executing trades on your account via API and more. We serve different risk appetites through our algorithms. Are you solely focused on accumulating USD while not risking significant portfolio risk? CMC Block Ventures has you covered with our Intel Bot Algorithm. Are you looking for more security and less risk in trades? CMC Block Ventures has you covered with our Banking Bot Algorithm. Which is purpose-built to trade all 100% algorithmic.

Let’s dive into the Official CMC Block Ventures Algorithm since that’s the reason for this blog post. The Algorithms are built and tested on about two years of data. It has handled bear markets and a bull run perfectly fine. At the time of writing, the Algorithms are active on a few different trading assets. Throughout the two years of testing, it averages about 70 trades per month, with an averaged out the accuracy of 71%. That is not achieved by having “micro targets” the contrary is true: It makes these numbers while delivering an average risk to reward ratio of 1.1 per trade taken. How does that look in “the real world”? Well: On 71% of the 70 trades made monthly, you’re earning 1.10 USD per 1.00 USD risked per winning the trade.

We have also run a month of live testing. The Trading Algorithms have all sorts of filters to avoid excessive risk when the market isn’t suited for taking risks. Therefore, our live trading month (November 2019) only has 39 trades. The results, however, speak for themselves.

This is a snippet from our officially released white paper for our members. Eventually, CMC Block Ventures is proud to be in a position to provide these trading algorithms to our retail and corporate client base. We’re grateful for our dedicated team developing and improving the systems day in day out. Stand by; in the future, we’re planning to release scalping algorithms, aggressive algorithms, and more.

That is just the beginning.