Algorithms are everywhere. Daily taking over more and more tasks. Whether it is as assistance systems in cars, purchase recommendations for online shopping or diagnostic assistance in medicine. In equity and currency markets, the majority of trading decisions are already taken by algorithms. The same trend is also gradually emerging on the European energy markets. But what exactly is algorithmic trading and what is the attraction to this approach?

Algorithmic Trading means the trading with clearly defined, pre-tested rules. The entry point, the choice of position size, the stop management and the calculation of price targets all follow a system. The main focus of such a trading strategy is the use of (varied) technical analysis tools. Through back tests, recurring patterns and relationships can be identified on the basis of historical (price) data before being used in real trading.

Compared to the discretionary approach, the algorithmic trading provides a decisive advantage: Instead of betting on the trader’s intuition, all decisions are based on quantitative factors, which are given 100 % by the computer. The comparison between a human trader and an algorithm explains why this aspect is of central importance:

  • Depending on the physiological condition or external influences, people can make different decisions with the same facts. Algorithms do not have this problem.
  • People rely on heuristics that are not always meaningful and empirically founded. Algorithms rely exclusively on facts.
  • People tend to show overconfidence and over optimism. Algorithms do not know these states. They do not have emotions and have no ego.


Philipp Kahler

Philipp was born in Austria and studied electrical engineering before joining a large German bank where he developed fully automated trading strategies for the proprietary trading department. Currently at Tradesignal Ltd., he is responsible for the in-house training of institutional traders and the development of custom-made algorithmic trading strategies.

David Pieper

David has 15 years of financial market experience and is a Senior Technical Analyst at Tradesignal Ltd. responsible for the care of institutional clients and editorial content. After completing his business studies and continuing his education as a Certified International Investment Analyst (CIIA), he spent many years in investment research at a major German Landesbank. His passion for technical analysis and algorithmic trading is regularly expressed in TRADERS magazine contributions.

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Jack Tierney

Born and raised in London Jack is a Senior Quantitative Analyst at Tradesignal Ltd. He is responsible for training institutional clients within Tradesignal and working with them in the development of algorithmic trading strategies. Jack studied as a classical pianist and composer, before becoming a certified Technical Analyst and applying his creativity to automated strategies and the financial markets.

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