What Is Algorithmic Trading?

Algorithmic trading is the use of a coded set of rules — a trading algorithm — to decide when to enter and exit a position, instead of a person making that call in the moment. The algorithm watches live price data, checks it against its conditions (a moving average crossover, a volatility threshold, a specific candlestick pattern — whatever the strategy is built on), and fires a trade the instant those conditions are met.

This is different from discretionary or manual trading, where a trader reads the chart and news themselves and decides case by case. Algorithmic trading removes that in-the-moment judgment call — for better and worse. Better, because it removes hesitation, fear and revenge-trading after a loss. Worse, because the algorithm can't adapt to something genuinely outside its design the way an experienced human might.

A trading algorithm isn't inherently good or profitable — plenty of poorly designed ones lose money reliably. What matters is: was it properly backtested, does it have real (not just simulated) live results, and are the losing periods disclosed alongside the winning ones? That last part is where a lot of algorithmic trading software falls short — publishing the highlight reel, not the full record.

Our own trading algorithm runs the same rule-set behind our published 15-month track record — 1,728 trades, including the losing ones, all disclosed.