Are the Algos Killing the Market?

Reading headlines in the financial press and you would think algos are causing trouble and strife and volatility in the markets.

There is a minority however, who correctly explain, firstly — it was always thus, and secondly, if the correct price is discovered sooner, then of course prices mover more quickly and the traditional trends become shorter and sharper.

But what all this analysis would benefit from is to actually look at some market moves. Our own algos provided us these signals to pick trends today. Do the markets look volatile to you? Untradeable? No room for profits?

What has changed is the sense that there are more shorter trends. And for that our remedy has been to trade 30m and 1h bars not 4h and 1d ones.

Also, there have been fewer trends — that is also what the algo complainers mean. And our remedy for that is to observe more markets so get the opportunity to find more opportunities.

It’s maybe those who’ve found the old ways no longer work, looking to blame performance and strategy deterioration on someone else. But it is true, the old ways haven’t worked for a while. What’s true of the real world is true of the algo world.

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Alpesh Patel is a partner to 24option.com